Mr. Baucus (for himself
and Mr. Grassley) introduced the
following bill; which was read twice and referred to the
Committee on
Finance

A BILL

To amend the Internal Revenue Code of 1986 to provide
incentives for the production of energy, to provide transportation and domestic
fuel security, and to provide incentives for energy conservation and energy
efficiency, and for other purposes.

1.

Short title, etc

(a)

Short title

This Act may be cited as the
Energy Independence and Investment Act
of 2008.

(b)

Reference

Except as otherwise expressly provided,
whenever in this Act an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference shall
be considered to be made to a section or other provision of the Internal
Revenue Code of 1986.

(c)

Table of contents

The table of contents for this Act is as
follows:

Sec. 1. Short title, etc.

TITLE I—Energy production incentives

Subtitle A—Renewable energy incentives

Sec. 101. Renewable energy credit.

Sec. 102. Production credit for electricity produced from
marine renewables.

Sec. 209. Certain income and gains relating to alcohol fuels
and mixtures, biodiesel fuels and mixtures, and alternative fuels and mixtures
treated as qualifying income for publicly traded partnerships.

Each of the following provisions of section
45(d) is amended by striking January 1, 2009 and inserting
January 1, 2012:

(1)

Paragraph
(1).

(2)

Clauses (i) and (ii) of paragraph
(2)(A).

(3)

Clauses (i)(I) and (ii) of paragraph
(3)(A).

(4)

Paragraph (4).

(5)

Paragraph (5).

(6)

Paragraph (6).

(7)

Paragraph (7).

(8)

Paragraph
(8).

(9)

Subparagraphs (A) and (B) of paragraph
(9).

(b)

Modification of
refined coal as a qualified energy resource

(1)

Elimination of
increased market value test

Section 45(c)(7)(A) (defining refined
coal) is amended—

(A)

by striking
clause (iv),

(B)

by adding
and at the end of clause (ii), and

(C)

by striking
, and at the end of clause (iii) and inserting a period.

(2)

Increase in
required emission reduction

Section 45(c)(7)(B) (defining
qualified emission reduction) is amended by inserting at least 40
percent of the emissions of after nitrogen oxide
and.

(c)

Trash facility clarification

Paragraph (7) of section 45(d) is
amended—

(1)

by striking facility which
burns and inserting facility (other than a facility described in
paragraph (6)) which uses, and

(2)

by striking combustion.

(d)

Expansion of biomass facilities

(1)

Open-loop biomass facilities

Paragraph (3) of section 45(d) is amended
by redesignating subparagraph (B) as subparagraph (C) and by inserting after
subparagraph (A) the following new subparagraph:

(B)

Expansion of facility

Such term shall include a new unit placed
in service after the date of the enactment of this subparagraph in connection
with a facility described in subparagraph (A), but only to the extent of the
increased amount of electricity produced at the facility by reason of such new
unit.

.

(2)

Closed-loop biomass
facilities

Paragraph (2) of
section 45(d) is amended by redesignating subparagraph (B) as subparagraph (C)
and inserting after subparagraph (A) the following new subparagraph:

(B)

Expansion of facility

Such term shall include a new unit placed
in service after the date of the enactment of this subparagraph in connection
with a facility described in subparagraph (A)(i), but only to the extent of the
increased amount of electricity produced at the facility by reason of such new
unit.

.

(e)

Modification of rules for hydropower
production

Subparagraph (C)
of section 45(c)(8) is amended to read as follows:

(C)

Nonhydroelectric dam

For purposes of subparagraph (A), a
facility is described in this subparagraph if—

(i)

the hydroelectric project installed on the
nonhydroelectric dam is licensed by the Federal Energy Regulatory Commission
and meets all other applicable environmental, licensing, and regulatory
requirements,

(ii)

the nonhydroelectric dam was placed in
service before the date of the enactment of this paragraph and operated for
flood control, navigation, or water supply purposes and did not produce
hydroelectric power on the date of the enactment of this paragraph, and

(iii)

the hydroelectric project is operated so
that the water surface elevation at any given location and time that would have
occurred in the absence of the hydroelectric project is maintained, subject to
any license requirements imposed under applicable law that change the water
surface elevation for the purpose of improving environmental quality of the
affected waterway.

The Secretary, in consultation
with the Federal Energy Regulatory Commission, shall certify if a hydroelectric
project licensed at a nonhydroelectric dam meets the criteria in clause (iii).
Nothing in this section shall affect the standards under which the Federal
Energy Regulatory Commission issues licenses for and regulates hydropower
projects under part I of the Federal Power
Act.

.

(f)

Effective date

(1)

In general

Except as otherwise provided in this
subsection, the amendments made by this section shall apply to property
originally placed in service after December 31, 2008.

(2)

Refined
coal

The amendments made by
subsection (b) shall apply to coal produced and sold after December 31,
2008.

(3)

Trash facility clarification

The amendments made by subsection (c) shall
apply to electricity produced and sold after the date of the enactment of this
Act.

(4)

Expansion of biomass
facilities

The amendments
made by subsection (d) shall apply to property placed in service after the date
of the enactment of this Act.

102.

Production credit for electricity produced
from marine renewables

(a)

In general

Paragraph (1) of section 45(c) is amended
by striking and at the end of subparagraph (G), by striking the
period at the end of subparagraph (H) and inserting , and, and
by adding at the end the following new subparagraph:

(I)

marine and hydrokinetic renewable
energy.

.

(b)

Marine renewables

Subsection (c) of section 45 is amended by
adding at the end the following new paragraph:

free flowing water in an irrigation system,
canal, or other man-made channel, including projects that utilize nonmechanical
structures to accelerate the flow of water for electric power production
purposes, or

(iv)

differentials in ocean temperature (ocean
thermal energy conversion).

(B)

Exceptions

Such term shall not include any energy
which is derived from any source which utilizes a dam, diversionary structure
(except as provided in subparagraph (A)(iii)), or impoundment for electric
power production
purposes.

.

(c)

Definition of facility

Subsection (d) of section 45 is amended by
adding at the end the following new paragraph:

(11)

Marine and hydrokinetic renewable energy
facilities

In the case of a
facility producing electricity from marine and hydrokinetic renewable energy,
the term qualified facility means any facility owned by the
taxpayer—

(A)

which has a nameplate capacity rating of at
least 150 kilowatts, and

(B)

which is originally placed in service on or
after the date of the enactment of this paragraph and before January 1,
2012.

.

(d)

Credit rate

Subparagraph (A) of section 45(b)(4) is
amended by striking or (9) and inserting (9), or
(11).

(e)

Coordination with small irrigation
power

Paragraph (5) of
section 45(d), as amended by section 101, is amended by striking January
1, 2012 and inserting the date of the enactment of paragraph
(11).

(f)

Effective
date

The amendments made by
this section shall apply to electricity produced and sold after the date of the
enactment of this Act, in taxable years ending after such date.

103.

Energy credit

(a)

Extension of credit

(1)

Solar energy property

Paragraphs (2)(A)(i)(II) and (3)(A)(ii) of
section 48(a) are each amended by striking January 1, 2009 and
inserting January 1, 2017.

(2)

Fuel cell property

Subparagraph (E) of section 48(c)(1) is
amended by striking December 31, 2008 and inserting
December 31, 2016.

(3)

Microturbine property

Subparagraph (E) of section 48(c)(2) is
amended by striking December 31, 2008 and inserting
December 31, 2016.

(b)

Allowance of energy credit against
alternative minimum tax

Subparagraph (B) of section 38(c)(4), as
amended by the Housing Assistance Tax Act of 2008, is amended by redesignating
clauses (v) and (vi) as clauses (vi) and (vii), respectively, and by inserting
after clause (iv) the following new clause:

(v)

the credit determined under section 46 to
the extent that such credit is attributable to the energy credit determined
under section
48,

.

(c)

Energy credit for combined heat and power
system property

(1)

In general

Section 48(a)(3)(A) is amended by striking
or at the end of clause (iii), by inserting or at
the end of clause (iv), and by adding at the end the following new
clause:

(v)

combined heat and power system
property,

.

(2)

Combined Heat and Power System
Property

Subsection (c) of
section 48 is amended—

(A)

by striking
Qualified fuel cell
property; qualified microturbine property in the
heading and inserting Definitions, and

(B)

by adding at the end the following new
paragraph:

(3)

Combined Heat and Power System
Property

(A)

Combined heat and power system
property

The term
combined heat and power system property means property comprising
a system—

(i)

which uses the same energy source for the
simultaneous or sequential generation of electrical power, mechanical shaft
power, or both, in combination with the generation of steam or other forms of
useful thermal energy (including heating and cooling applications),

(ii)

which produces—

(I)

at least 20 percent of its total useful
energy in the form of thermal energy which is not used to produce electrical or
mechanical power (or combination thereof), and

(II)

at least 20 percent of its total useful
energy in the form of electrical or mechanical power (or combination
thereof),

(iii)

the energy efficiency percentage of which
exceeds 60 percent, and

(iv)

which is placed in service before January
1, 2017.

(B)

Limitation

(i)

In general

In the case of combined heat and power
system property with an electrical capacity in excess of the applicable
capacity placed in service during the taxable year, the credit under subsection
(a)(1) (determined without regard to this paragraph) for such year shall be
equal to the amount which bears the same ratio to such credit as the applicable
capacity bears to the capacity of such property.

(ii)

Applicable capacity

For purposes of clause (i), the term
applicable capacity means 15 megawatts or a mechanical energy
capacity of more than 20,000 horsepower or an equivalent combination of
electrical and mechanical energy capacities.

(iii)

Maximum capacity

The term combined heat and power
system property shall not include any property comprising a system if
such system has a capacity in excess of 50 megawatts or a mechanical energy
capacity in excess of 67,000 horsepower or an equivalent combination of
electrical and mechanical energy capacities.

(C)

Special rules

(i)

Energy efficiency percentage

For purposes of this paragraph, the energy
efficiency percentage of a system is the fraction—

(I)

the numerator of which is the total useful
electrical, thermal, and mechanical power produced by the system at normal
operating rates, and expected to be consumed in its normal application,
and

(II)

the denominator of which is the lower
heating value of the fuel sources for the system.

(ii)

Determinations made on btu
basis

The energy efficiency
percentage and the percentages under subparagraph (A)(ii) shall be determined
on a Btu basis.

(iii)

Input and output property not
included

The term
combined heat and power system property does not include property
used to transport the energy source to the facility or to distribute energy
produced by the facility.

(D)

Systems using biomass

If a system is designed to use biomass
(within the meaning of paragraphs (2) and (3) of section 45(c) without regard
to the last sentence of paragraph (3)(A)) for at least 90 percent of the energy
source—

(i)

subparagraph (A)(iii) shall not apply,
but

(ii)

the amount of credit determined under
subsection (a) with respect to such system shall not exceed the amount which
bears the same ratio to such amount of credit (determined without regard to
this subparagraph) as the energy efficiency percentage of such system bears to
60
percent.

.

(d)

Increase of credit limitation for fuel cell
property

Subparagraph (B) of
section 48(c)(1) is amended by striking $500 and inserting
$1,500.

(e)

Public utility property taken into
account

(1)

In general

Paragraph (3) of section 48(a) is amended
by striking the second sentence thereof.

Except as otherwise provided in this
subsection, the amendments made by this section shall take effect on the date
of the enactment of this Act.

(2)

Allowance against alternative minimum
tax

The amendments made by
subsection (b) shall apply to credits determined under section 46 of the
Internal Revenue Code of 1986 in taxable years beginning after the date of the
enactment of this Act and to carrybacks of such credits.

(3)

Combined heat and power and fuel cell
property

The amendments made
by subsections (c) and (d) shall apply to periods after the date of the
enactment of this Act, in taxable years ending after such date, under rules
similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as
in effect on the day before the date of the enactment of the Revenue
Reconciliation Act of 1990).

(4)

Public utility property

The amendments made by subsection (e) shall
apply to periods after February 13, 2008, in taxable years ending after such
date, under rules similar to the rules of section 48(m) of the Internal Revenue
Code of 1986 (as in effect on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990).

104.

Credit for residential energy efficient
property

(a)

Extension

Section 25D(g) is amended by striking
December 31, 2008 and inserting December 31,
2016.

(b)

Maximum credit for solar electric
property

(1)

In general

Section 25D(b)(1)(A) is amended by striking
$2,000 and inserting $4,000.

(2)

Conforming amendment

Section 25D(e)(4)(A)(i) is amended by
striking $6,667 and inserting $13,333.

(c)

Credit for residential wind
property

(1)

In general

Section 25D(a) is amended by striking
and at the end of paragraph (2), by striking the period at the
end of paragraph (3) and inserting , and, and by adding at the
end the following new paragraph:

(4)

30 percent of the qualified small wind
energy property expenditures made by the taxpayer during such
year.

.

(2)

Limitation

Section 25D(b)(1) is amended by striking
and at the end of subparagraph (B), by striking the period at
the end of subparagraph (C) and inserting , and, and by adding
at the end the following new subparagraph:

(D)

$500 with respect to each half kilowatt of
capacity (not to exceed $4,000) of wind turbines for which qualified small wind
energy property expenditures are
made.

.

(3)

Qualified small wind energy property
expenditures

(A)

In general

Section 25D(d) is amended by adding at the
end the following new paragraph:

(4)

Qualified small wind energy property
expenditure

The term
qualified small wind energy property expenditure means an
expenditure for property which uses a wind turbine to generate electricity for
use in connection with a dwelling unit located in the United States and used as
a residence by the
taxpayer.

.

(B)

No double benefit

Section 45(d)(1) is amended by adding at
the end the following new sentence: Such term shall not include any
facility with respect to which any qualified small wind energy property
expenditure (as defined in subsection (d)(4) of section 25D) is taken into
account in determining the credit under such section..

(4)

Maximum expenditures in case of joint
occupancy

Section
25D(e)(4)(A) is amended by striking and at the end of clause
(ii), by striking the period at the end of clause (iii) and inserting ,
and, and by adding at the end the following new clause:

(iv)

$1,667 in the case of each half kilowatt of
capacity (not to exceed $13,333) of wind turbines for which qualified small
wind energy property expenditures are
made.

.

(d)

Credit for geothermal heat Pump
systems

(1)

In general

Section 25D(a), as amended by subsection
(c), is amended by striking and at the end of paragraph (3), by
striking the period at the end of paragraph (4) and inserting ,
and, and by adding at the end the following new paragraph:

(5)

30 percent of the qualified geothermal heat
pump property expenditures made by the taxpayer during such
year.

.

(2)

Limitation

Section 25D(b)(1), as amended by subsection
(c), is amended by striking and at the end of subparagraph (C),
by striking the period at the end of subparagraph (D) and inserting ,
and, and by adding at the end the following new subparagraph:

Section 25D(d),
as amended by subsection (c), is amended by adding at the end the following new
paragraph:

(5)

Qualified geothermal heat pump property
expenditure

(A)

In general

The term qualified geothermal heat
pump property expenditure means an expenditure for qualified geothermal
heat pump property installed on or in connection with a dwelling unit located
in the United States and used as a residence by the taxpayer.

uses the ground or ground water as a
thermal energy source to heat the dwelling unit referred to in subparagraph (A)
or as a thermal energy sink to cool such dwelling unit, and

(ii)

meets the requirements of the Energy Star
program which are in effect at the time that the expenditure for such equipment
is
made.

.

(4)

Maximum expenditures in case of joint
occupancy

Section
25D(e)(4)(A), as amended by subsection (c), is amended by striking
and at the end of clause (iii), by striking the period at the
end of clause (iv) and inserting , and, and by adding at the end
the following new clause:

(v)

$6,667 in the case of any qualified
geothermal heat pump property
expenditures.

.

(e)

Credit allowed against alternative minimum
tax

(1)

In general

Subsection (c) of section 25D is amended to
read as follows:

(c)

Limitation based on amount of tax;
carryforward of unused credit

(1)

Limitation based on amount of
tax

In the case of a taxable
year to which section 26(a)(2) does not apply, the credit allowed under
subsection (a) for the taxable year shall not exceed the excess of—

(A)

the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by section 55, over

(B)

the sum of the credits allowable under this
subpart (other than this section) and section 27 for the taxable year.

(2)

Carryforward of unused credit

(A)

Rule for years in which all personal
credits allowed against regular and alternative minimum tax

In the case of a taxable year to which
section 26(a)(2) applies, if the credit allowable under subsection (a) exceeds
the limitation imposed by section 26(a)(2) for such taxable year reduced by the
sum of the credits allowable under this subpart (other than this section), such
excess shall be carried to the succeeding taxable year and added to the credit
allowable under subsection (a) for such succeeding taxable year.

(B)

Rule for other years

In the case of a taxable year to which
section 26(a)(2) does not apply, if the credit allowable under subsection (a)
exceeds the limitation imposed by paragraph (1) for such taxable year, such
excess shall be carried to the succeeding taxable year and added to the credit
allowable under subsection (a) for such succeeding taxable
year.

.

(2)

Conforming amendments

(A)

Section 23(b)(4)(B) is amended by inserting
and section 25D after this section.

(B)

Section 24(b)(3)(B) is amended by striking
and 25B and inserting , 25B, and 25D.

Section 26(a)(1) is amended by striking
and 25B and inserting 25B, and 25D.

(f)

Effective date

(1)

In general

The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.

(2)

Application of EGTRRA sunset

The amendments made by subparagraphs (A)
and (B) of subsection (e)(2) shall be subject to title IX of the Economic
Growth and Tax Relief Reconciliation Act of 2001 in the same manner as the
provisions of such Act to which such amendments relate.

105.

New clean renewable energy bonds

(a)

In general

Subpart I of part IV of subchapter A of
chapter 1 is amended by adding at the end the following new section:

54C.

New clean renewable energy bonds

(a)

New clean renewable energy
bond

For purposes of this
subpart, the term new clean renewable energy bond means any bond
issued as part of an issue if—

(1)

100 percent of the available project
proceeds of such issue are to be used for capital expenditures incurred by
governmental bodies, public power providers, or cooperative electric companies
for one or more qualified renewable energy facilities,

(2)

the bond is issued by a qualified issuer,
and

(3)

the issuer designates such bond for
purposes of this section.

(b)

Reduced credit amount

The annual credit determined under section
54A(b) with respect to any new clean renewable energy bond shall be 70 percent
of the amount so determined without regard to this subsection.

(c)

Limitation on amount of bonds
designated

(1)

In general

The maximum aggregate face amount of bonds
which may be designated under subsection (a) by any issuer shall not exceed the
limitation amount allocated under this subsection to such issuer.

(2)

National limitation on amount of bonds
designated

There is a
national new clean renewable energy bond limitation of $2,000,000,000 which
shall be allocated by the Secretary as provided in paragraph (3), except
that—

(A)

not more than 331/3
percent thereof may be allocated to qualified projects of public power
providers,

(B)

not more than 331/3
percent thereof may be allocated to qualified projects of governmental bodies,
and

(C)

not more than 331/3
percent thereof may be allocated to qualified projects of cooperative electric
companies.

(3)

Method of allocation

(A)

Allocation among public power
providers

After the Secretary
determines the qualified projects of public power providers which are
appropriate for receiving an allocation of the national new clean renewable
energy bond limitation, the Secretary shall, to the maximum extent practicable,
make allocations among such projects in such manner that the amount allocated
to each such project bears the same ratio to the cost of such project as the
limitation under paragraph (2)(A) bears to the cost of all such
projects.

The Secretary shall make allocations of the
amount of the national new clean renewable energy bond limitation described in
paragraphs (2)(B) and (2)(C) among qualified projects of governmental bodies
and cooperative electric companies, respectively, in such manner as the
Secretary determines appropriate.

(d)

Definitions

For purposes of this section—

(1)

Qualified renewable energy
facility

The term
qualified renewable energy facility means a qualified facility (as
determined under section 45(d) without regard to paragraphs (8) and (10)
thereof and to any placed in service date) owned by a public power provider, a
governmental body, or a cooperative electric company.

(2)

Public power provider

The term public power provider
means a State utility with a service obligation, as such terms are defined in
section 217 of the Federal Power Act (as in effect on the date of the enactment
of this paragraph).

(3)

Governmental body

The term governmental body
means any State or Indian tribal government, or any political subdivision
thereof.

(4)

Cooperative electric company

The term cooperative electric
company means a mutual or cooperative electric company described in
section 501(c)(12) or section 1381(a)(2)(C).

(5)

Clean renewable energy bond
lender

The term clean
renewable energy bond lender means a lender which is a cooperative which
is owned by, or has outstanding loans to, 100 or more cooperative electric
companies and is in existence on February 1, 2002, and shall include any
affiliated entity which is controlled by such lender.

(6)

Qualified issuer

The term qualified issuer
means a public power provider, a cooperative electric company, a governmental
body, a clean renewable energy bond lender, or a not-for-profit electric
utility which has received a loan or loan guarantee under the Rural
Electrification
Act.

.

(b)

Conforming amendments

(1)

Paragraph (1) of section 54A(d) is amended
to read as follows:

(1)

Qualified tax credit bond

The term qualified tax credit
bond means—

(A)

a qualified forestry conservation bond,
or

(B)

a new clean renewable energy bond,

which is part of an issue that meets
requirements of paragraphs (2), (3), (4), (5), and
(6).

.

(2)

Subparagraph (C) of section 54A(d)(2) is
amended to read as follows:

(C)

Qualified purpose

For purposes of this paragraph, the term
qualified purpose means—

(i)

in the case of a qualified forestry
conservation bond, a purpose specified in section 54B(e), and

(ii)

in the case of a new clean renewable energy
bond, a purpose specified in section
54C(a)(1).

.

(3)

The table of sections for subpart I of part
IV of subchapter A of chapter 1 is amended by adding at the end the following
new item:

Sec. 54C. Qualified
clean renewable energy
bonds.

.

(c)

Extension for
clean renewable energy bonds

Subsection (m) of section 54 is
amended by striking December 31, 2008 and inserting
December 31, 2009.

(d)

Effective
date

The amendments made by
this section shall apply to obligations issued after the date of the enactment
of this Act.

106.

Energy credit
for small wind property

(a)

In
general

Section 48(a)(3)(A), as amended by subsection (c), is
amended by striking or at the end of clause (iv), by adding
or at the end of clause (v), and by inserting after clause (v)
the following new clause:

(vi)

qualified small
wind energy
property,

.

(b)

30 percent
credit

Section 48(a)(2)(A)(i) is amended by striking
and at the end of subclause (II) and by inserting after
subclause (III) the following new subclause:

(IV)

qualified small
wind energy property,
and

.

(c)

Qualified small
wind energy property

Section 48(c) is amended by adding at the
end the following new paragraph:

(4)

Qualified small
wind energy property

(A)

In
general

The term qualified small wind energy
property means property which uses a qualifying small wind turbine to
generate electricity.

(B)

Limitation

In
the case of qualified small wind energy property placed in service during the
taxable year, the credit otherwise determined under subsection (a)(1) for such
year with respect to such property shall not exceed $4,000 with respect to any
taxpayer.

(C)

Qualifying
small wind turbine

The term qualifying small wind
turbine means a wind turbine which—

(i)

has a nameplate
capacity of not more than 100 kilowatts, and

(ii)

meets the
performance standards of the American Wind Energy Association.

(D)

Termination

The
term qualified small wind energy property shall not include any
property for any period after December 31,
2016.

The amendments made by this section shall apply to periods
after the date of the enactment of this Act, in taxable years ending after such
date, under rules similar to the rules of section 48(m) of the Internal Revenue
Code of 1986 (as in effect on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990).

107.

Energy credit for
geothermal heat pump systems

(a)

In
general

Subparagraph (A) of
section 48(a)(3),
as amended by this Act, is amended by striking
or at the end of clause (v), by inserting or at
the end of clause (vi), and by adding at the end the following new
clause:

(vii)

equipment which
uses the ground or ground water as a thermal energy source to heat a structure
or as a thermal energy sink to cool a structure, but only with respect to
periods ending before January 1,
2017,

.

(b)

Effective
date

The amendments made by this section shall apply to periods
after the date of the enactment of this Act, in taxable years ending after such
date, under rules similar to the rules of section 48(m) of the Internal Revenue
Code of 1986 (as in effect on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990).

B

Carbon mitigation and coal
provisions

111.

Expansion and modification of advanced coal
project investment credit

(a)

Modification of credit amount

Section 48A(a) is amended by striking
and at the end of paragraph (1), by striking the period at the
end of paragraph (2) and inserting , and, and by adding at the
end the following new paragraph:

(3)

30 percent of the qualified investment for
such taxable year in the case of projects described in clause (iii) of
subsection
(d)(3)(B).

.

(b)

Expansion of aggregate
credits

Section 48A(d)(3)(A)
is amended by striking $1,300,000,000 and inserting
$3,300,000,000.

(c)

Authorization of Additional
Projects

(1)

In general

Subparagraph (B) of section 48A(d)(3) is
amended to read as follows:

(B)

Particular projects

Of the dollar amount in subparagraph (A),
the Secretary is authorized to certify—

(i)

$800,000,000 for integrated gasification
combined cycle projects the application for which is submitted during the
period described in paragraph (2)(A)(i),

(ii)

$500,000,000 for projects which use other
advanced coal-based generation technologies the application for which is
submitted during the period described in paragraph (2)(A)(i), and

(iii)

$2,000,000,000 for advanced coal-based
generation technology projects the application for which is submitted during
the period described in paragraph
(2)(A)(ii).

.

(2)

Application period for additional
projects

Subparagraph (A) of
section 48A(d)(2) is amended to read as follows:

(A)

Application period

Each applicant for certification under this
paragraph shall submit an application meeting the requirements of subparagraph
(B). An applicant may only submit an application—

(i)

for an allocation from the dollar amount
specified in clause (i) or (ii) of paragraph (3)(B) during the 3-year period
beginning on the date the Secretary establishes the program under paragraph
(1), and

(ii)

for an allocation from the dollar amount
specified in paragraph (3)(B)(iii) during the 3-year period beginning at the
earlier of the termination of the period described in clause (i) or the date
prescribed by the
Secretary.

.

(3)

Capture and sequestration of carbon dioxide
emissions requirement

(A)

In general

Section 48A(e)(1) is amended by striking
and at the end of subparagraph (E), by striking the period at
the end of subparagraph (F) and inserting ; and, and by adding
at the end the following new subparagraph:

(G)

in the case of any project the application
for which is submitted during the period described in subsection (d)(2)(A)(ii),
the project includes equipment which separates and sequesters at least 65
percent (70 percent in the case of an application for reallocated credits under
subsection (d)(4)) of such project's total carbon dioxide
emissions.

Section 48A(e)(3) is amended by striking
and at the end of subparagraph (A)(iii), by striking the period
at the end of subparagraph (B)(iii) and inserting , and, and by
adding at the end the following new subparagraph:

(C)

give highest priority to projects with the
greatest separation and sequestration percentage of total carbon dioxide
emissions.

.

(C)

Recapture of credit for failure to
sequester

Section 48A is
amended by adding at the end the following new subsection:

(i)

Recapture of credit for failure To
sequester

The Secretary shall
provide for recapturing the benefit of any credit allowable under subsection
(a) with respect to any project which fails to attain or maintain the
separation and sequestration requirements of subsection
(e)(1)(G).

.

(4)

Additional priority for research
partnerships

Section
48A(e)(3)(B), as amended by paragraph (3)(B), is amended—

(A)

by striking and at the end
of clause (ii),

(B)

by redesignating clause (iii) as clause
(iv), and

(C)

by inserting after clause (ii) the
following new clause:

(iii)

applicant participants who have a research
partnership with an eligible educational institution (as defined in section
529(e)(5)),
and

.

(5)

Clerical amendment

Section 48A(e)(3) is amended by striking
integrated gasification
combined cycle in the heading and inserting
certain.

(d)

Disclosure of allocations

Section 48A(d) is amended by adding at the
end the following new paragraph:

(5)

Disclosure of allocations

The Secretary shall, upon making a
certification under this subsection or section 48B(d), publicly disclose the
identity of the applicant and the amount of the credit certified with respect
to such
applicant.

.

(e)

Effective dates

(1)

In general

Except as otherwise provided in this
subsection, the amendments made by this section shall apply to credits the
application for which is submitted during the period described in section
48A(d)(2)(A)(ii) of the Internal Revenue Code of 1986 and which are allocated
or reallocated after the date of the enactment of this Act.

(2)

Disclosure of allocations

The amendment made by subsection (d) shall
apply to certifications made after the date of the enactment of this
Act.

(3)

Clerical amendment

The amendment made by subsection (c)(5)
shall take effect as if included in the amendment made by section 1307(b) of
the Energy Tax Incentives Act of 2005.

112.

Expansion and modification of coal
gasification investment credit

(a)

Modification of credit amount

Section 48B(a) is amended by inserting
(30 percent in the case of credits allocated under subsection
(d)(1)(B)) after 20 percent.

(b)

Expansion of aggregate
credits

Section 48B(d)(1) is
amended by striking shall not exceed $350,000,000 and all that
follows and inserting

shall not
exceed—

(A)

$350,000,000, plus

(B)

$500,000,000 for qualifying gasification
projects that include equipment which separates and sequesters at least 75
percent of such project’s total carbon dioxide
emissions.

.

(c)

Recapture of credit for failure To
sequester

Section 48B is
amended by adding at the end the following new subsection:

(f)

Recapture of credit for failure To
sequester

The Secretary shall
provide for recapturing the benefit of any credit allowable under subsection
(a) with respect to any project which fails to attain or maintain the
separation and sequestration requirements for such project under subsection
(d)(1).

.

(d)

Selection priorities

Section 48B(d) is amended by adding at the
end the following new paragraph:

(4)

Selection priorities

In determining which qualifying
gasification projects to certify under this section, the Secretary
shall—

(A)

give highest priority to projects with the
greatest separation and sequestration percentage of total carbon dioxide
emissions, and

(B)

give high priority to applicant
participants who have a research partnership with an eligible educational
institution (as defined in section
529(e)(5)).

.

(e)

Effective
date

The amendments made by
this section shall apply to credits described in section 48B(d)(1)(B) of the
Internal Revenue Code of 1986 which are allocated or reallocated after the date
of the enactment of this Act.

The term market value of the
outstanding repayable advances, plus accrued interest means the present
value (determined by the Secretary of the Treasury as of the refinancing date
and using the Treasury rate as the discount rate) of the stream of principal
and interest payments derived assuming that each repayable advance that is
outstanding on the refinancing date is due on the 30th anniversary of the end
of the fiscal year in which the advance was made to the Trust Fund, and that
all such principal and interest payments are made on September 30 of the
applicable fiscal year.

(B)

Refinancing
date

The term
refinancing date means the date occurring 2 days after the
enactment of this Act.

(C)

Repayable
advance

The term
repayable advance means an amount that has been appropriated to
the Trust Fund in order to make benefit payments and other expenditures that
are authorized under section 9501 of the Internal Revenue Code of 1986 and are
required to be repaid when the Secretary of the Treasury determines that monies
are available in the Trust Fund for such purpose.

(D)

Treasury
rate

The term Treasury
rate means a rate determined by the Secretary of the Treasury, taking
into consideration current market yields on outstanding marketable obligations
of the United States of comparable maturities.

(E)

Treasury 1-year
rate

The term Treasury
1-year rate means a rate determined by the Secretary of the Treasury,
taking into consideration current market yields on outstanding marketable
obligations of the United States with remaining periods to maturity of
approximately 1 year, to have been in effect as of the close of business 1
business day prior to the date on which the Trust Fund issues obligations to
the Secretary of the Treasury under paragraph (2)(B).

(2)

Refinancing of
outstanding principal of repayable advances and unpaid interest on such
advances

(A)

Transfer to
general fund

On the refinancing date, the Trust Fund shall repay
the market value of the outstanding repayable advances, plus accrued interest,
by transferring into the general fund of the Treasury the following
sums:

(i)

The
proceeds from obligations that the Trust Fund shall issue to the Secretary of
the Treasury in such amounts as the Secretaries of Labor and the Treasury shall
determine and bearing interest at the Treasury rate, and that shall be in such
forms and denominations and be subject to such other terms and conditions,
including maturity, as the Secretary of the Treasury shall prescribe.

(ii)

All, or that
portion, of the appropriation made to the Trust Fund pursuant to paragraph (3)
that is needed to cover the difference defined in that paragraph.

(B)

Repayment of
obligations

In the event that the Trust Fund is unable to repay
the obligations that it has issued to the Secretary of the Treasury under
subparagraph (A)(i) and this subparagraph, or is unable to make benefit
payments and other authorized expenditures, the Trust Fund shall issue
obligations to the Secretary of the Treasury in such amounts as may be
necessary to make such repayments, payments, and expenditures, with a maturity
of 1 year, and bearing interest at the Treasury 1-year rate. These obligations
shall be in such forms and denominations and be subject to such other terms and
conditions as the Secretary of the Treasury shall prescribe.

(C)

Authority to
issue obligations

The Trust Fund is authorized to issue
obligations to the Secretary of the Treasury under subparagraphs (A)(i) and
(B). The Secretary of the Treasury is authorized to purchase such obligations
of the Trust Fund. For the purposes of making such purchases, the Secretary of
the Treasury may use as a public debt transaction the proceeds from the sale of
any securities issued under chapter 31 of title 31, United States Code, and the
purposes for which securities may be issued under such chapter are extended to
include any purchase of such Trust Fund obligations under this
subparagraph.

(3)

One-time
appropriation

There is hereby
appropriated to the Trust Fund an amount sufficient to pay to the general fund
of the Treasury the difference between—

(A)

the market value
of the outstanding repayable advances, plus accrued interest; and

(B)

the proceeds from
the obligations issued by the Trust Fund to the Secretary of the Treasury under
paragraph (2)(A)(i).

(4)

Prepayment of
Trust Fund obligations

The
Trust Fund is authorized to repay any obligation issued to the Secretary of the
Treasury under subparagraphs (A)(i) and (B) of paragraph (2) prior to its
maturity date by paying a prepayment price that would, if the obligation being
prepaid (including all unpaid interest accrued thereon through the date of
prepayment) were purchased by a third party and held to the maturity date of
such obligation, produce a yield to the third-party purchaser for the period
from the date of purchase to the maturity date of such obligation substantially
equal to the Treasury yield on outstanding marketable obligations of the United
States having a comparable maturity to this period.

114.

Special rules for refund of the coal excise
tax to certain coal producers and exporters

(a)

Refund

(1)

Coal producers

(A)

In general

Notwithstanding subsections (a)(1) and (c)
of section 6416 and section 6511 of the Internal Revenue Code of 1986,
if—

(i)

a coal producer establishes that such coal
producer, or a party related to such coal producer, exported coal produced by
such coal producer to a foreign country or shipped coal produced by such coal
producer to a possession of the United States, or caused such coal to be
exported or shipped, the export or shipment of which was other than through an
exporter who meets the requirements of paragraph (2),

(ii)

such coal producer filed an excise tax
return on or after October 1, 1990, and on or before the date of the enactment
of this Act, and

(iii)

such coal producer files a claim for refund
with the Secretary not later than the close of the 30-day period beginning on
the date of the enactment of this Act,

then the Secretary shall pay to
such coal producer an amount equal to the tax paid under section 4121 of such
Code on such coal exported or shipped by the coal producer or a party related
to such coal producer, or caused by the coal producer or a party related to
such coal producer to be exported or shipped.(B)

Special rules for certain
taxpayers

For purposes of
this section—

(i)

In general

If a coal producer or a party related to a
coal producer has received a judgment described in clause (iii), such coal
producer shall be deemed to have established the export of coal to a foreign
country or shipment of coal to a possession of the United States under
subparagraph (A)(i).

(ii)

Amount of payment

If a taxpayer described in clause (i) is
entitled to a payment under subparagraph (A), the amount of such payment shall
be reduced by any amount paid pursuant to the judgment described in clause
(iii).

(iii)

Judgment described

A judgment is described in this
subparagraph if such judgment—

(I)

is made by a court of competent
jurisdiction within the United States,

(II)

relates to the constitutionality of any tax
paid on exported coal under section 4121 of the Internal Revenue Code of 1986,
and

(III)

is in favor of the coal producer or the
party related to the coal producer.

(2)

Exporters

Notwithstanding subsections (a)(1) and (c)
of section 6416 and section 6511 of the Internal Revenue Code of 1986, and a
judgment described in paragraph (1)(B)(iii) of this subsection, if—

(A)

an exporter establishes that such exporter
exported coal to a foreign country or shipped coal to a possession of the
United States, or caused such coal to be so exported or shipped,

(B)

such exporter filed a tax return on or
after October 1, 1990, and on or before the date of the enactment of this Act,
and

(C)

such exporter files a claim for refund with
the Secretary not later than the close of the 30-day period beginning on the
date of the enactment of this Act,

then the Secretary shall pay to such
exporter an amount equal to $0.825 per ton of such coal exported by the
exporter or caused to be exported or shipped, or caused to be exported or
shipped, by the exporter.(b)

Limitations

Subsection (a) shall not apply with respect
to exported coal if a settlement with the Federal Government has been made with
and accepted by, the coal producer, a party related to such coal producer, or
the exporter, of such coal, as of the date that the claim is filed under this
section with respect to such exported coal. For purposes of this subsection,
the term settlement with the Federal Government shall not include
any settlement or stipulation entered into as of the date of the enactment of
this Act, the terms of which contemplate a judgment concerning which any party
has reserved the right to file an appeal, or has filed an appeal.

(c)

Subsequent refund prohibited

No refund shall be made under this section
to the extent that a credit or refund of such tax on such exported or shipped
coal has been paid to any person.

(d)

Definitions

For purposes of this section—

(1)

Coal producer

The term coal producer means
the person in whom is vested ownership of the coal immediately after the coal
is severed from the ground, without regard to the existence of any contractual
arrangement for the sale or other disposition of the coal or the payment of any
royalties between the producer and third parties. The term includes any person
who extracts coal from coal waste refuse piles or from the silt waste product
which results from the wet washing (or similar processing) of coal.

(2)

Exporter

The term exporter means a
person, other than a coal producer, who does not have a contract, fee
arrangement, or any other agreement with a producer or seller of such coal to
export or ship such coal to a third party on behalf of the producer or seller
of such coal and—

(A)

is indicated in the shipper’s export
declaration or other documentation as the exporter of record, or

(B)

actually exported such coal to a foreign
country or shipped such coal to a possession of the United States, or caused
such coal to be so exported or shipped.

(3)

Related party

The term a party related to such coal
producer means a person who—

(A)

is related to such coal producer through
any degree of common management, stock ownership, or voting control,

(B)

is related (within the meaning of section
144(a)(3) of the Internal Revenue Code of 1986) to such coal producer,
or

(C)

has a contract, fee arrangement, or any
other agreement with such coal producer to sell such coal to a third party on
behalf of such coal producer.

(4)

Secretary

The term Secretary means the
Secretary of Treasury or the Secretary's designee.

(e)

Timing of refund

With respect to any claim for refund filed
pursuant to this section, the Secretary shall determine whether the
requirements of this section are met not later than 180 days after such claim
is filed. If the Secretary determines that the requirements of this section are
met, the claim for refund shall be paid not later than 180 days after the
Secretary makes such determination.

(f)

Interest

Any refund paid pursuant to this section
shall be paid by the Secretary with interest from the date of overpayment
determined by using the overpayment rate and method under section 6621 of the
Internal Revenue Code of 1986.

(g)

Denial of double benefit

The payment under subsection (a) with
respect to any coal shall not exceed—

(1)

in the case of a payment to a coal
producer, the amount of tax paid under section 4121 of the Internal Revenue
Code of 1986 with respect to such coal by such coal producer or a party related
to such coal producer, and

(2)

in the case of a payment to an exporter, an
amount equal to $0.825 per ton with respect to such coal exported by the
exporter or caused to be exported by the exporter.

(h)

Application of section

This section applies only to claims on coal
exported or shipped on or after October 1, 1990, through the date of the
enactment of this Act.

(i)

Standing not conferred

(1)

Exporters

With respect to exporters, this section
shall not confer standing upon an exporter to commence, or intervene in, any
judicial or administrative proceeding concerning a claim for refund by a coal
producer of any Federal or State tax, fee, or royalty paid by the coal
producer.

(2)

Coal
producers

With respect to
coal producers, this section shall not confer standing upon a coal producer to
commence, or intervene in, any judicial or administrative proceeding concerning
a claim for refund by an exporter of any Federal or State tax, fee, or royalty
paid by the producer and alleged to have been passed on to an exporter.

115.

Tax credit for
carbon dioxide sequestration

(a)

In
general

Subpart D of part IV of subchapter A of chapter 1
(relating to business credits) is amended by adding at the end the following
new section:

45Q.

Credit for
carbon dioxide sequestration

(a)

General
rule

For purposes of section
38, the carbon dioxide sequestration credit for any taxable year is an amount
equal to the sum of—

(1)

$20 per metric ton
of qualified carbon dioxide which is—

(A)

captured by the
taxpayer at a qualified facility, and

(B)

disposed of by
the taxpayer in secure geological storage, and

(2)

$10 per metric
ton of qualified carbon dioxide which is—

(A)

captured by the
taxpayer at a qualified facility, and

(B)

used by the
taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas
recovery project.

would otherwise be
released into the atmosphere as industrial emission of greenhouse gas,
and

(B)

is measured at the
source of capture and verified at the point of disposal or injection.

(2)

Recycled carbon
dioxide

The term qualified carbon dioxide includes
the initial deposit of captured carbon dioxide used as a tertiary injectant.
Such term does not include carbon dioxide that is re-captured, recycled, and
re-injected as part of the enhanced oil and natural gas recovery
process.

(c)

Qualified
facility

For purposes of this section, the term qualified
facility means any industrial facility—

(1)

which is owned by
the taxpayer,

(2)

at which carbon
capture equipment is placed in service, and

(3)

which captures
not less than 500,000 metric tons of carbon dioxide during the taxable
year.

(d)

Special rules
and other definitions

For purposes of this section—

(1)

Only carbon
dioxide captured and disposed of or used within the United States taken into
account

The credit under this section shall apply only with
respect to qualified carbon dioxide the capture and disposal or use of which is
within—

(A)

the United States
(within the meaning of section 638(1)), or

(B)

a possession of
the United States (within the meaning of section 638(2)).

(2)

Secure
geological storage

The Secretary, in consultation with the
Administrator of the Environmental Protection Agency, shall establish
regulations for determining adequate security measures for the geological
storage of carbon dioxide under subsection (a)(1)(B) such that the carbon
dioxide does not escape into the atmosphere. Such term shall include storage at
deep saline formations and unminable coal seems under such conditions as the
Secretary may determine under such regulations.

(3)

Tertiary
injectant

The term tertiary injectant has the same
meaning as when used within section 193(b)(1).

(4)

Qualified
enhanced oil or natural gas recovery project

The term
qualified enhanced oil or natural gas recovery project has the
meaning given the term qualified enhanced oil recovery project by
section 43(c)(2), by substituting crude oil or natural gas for
crude oil in subparagraph (A)(i) thereof.

(5)

Credit
attributable to taxpayer

Any credit under this section shall be
attributable to the person that captures and physically or contractually
ensures the disposal of or the use as a tertiary injectant of the qualified
carbon dioxide, except to the extent provided in regulations prescribed by the
Secretary.

(6)

Recapture

The
Secretary shall, by regulations, provide for recapturing the benefit of any
credit allowable under subsection (a) with respect to any qualified carbon
dioxide which ceases to be captured, disposed of, or used as a tertiary
injectant in a manner consistent with the requirements of this section.

(7)

Inflation
adjustment

In the case of any
taxable year beginning in a calendar year after 2009, there shall be
substituted for each dollar amount contained in subsection (a) an amount equal
to the product of—

(A)

such dollar amount, multiplied by

(B)

the inflation
adjustment factor for such calendar year determined under section 43(b)(3)(B)
for such calendar year, determined by substituting 2008 for
1990.

(e)

Application of
section

The credit under this section shall apply with respect to
qualified carbon dioxide before the end of the calendar year in which the
Secretary, in consultation with the Administrator of the Environmental
Protection Agency, certifies that 75,000,000 metric tons of qualified carbon
dioxide have been captured and disposed of or used as a tertiary
injectant.

.

(b)

Conforming
amendment

Section 38(b) (relating to general business credit) is
amended by striking plus at the end of paragraph (32), by
striking the period at the end of paragraph (33) and inserting ,
plus, and by adding at the end of following new paragraph:

The table of sections for subpart B of part IV of
subchapter A of chapter 1 (relating to other credits) is amended by adding at
the end the following new section:

Sec. 45Q. Credit for carbon dioxide
sequestration.

.

(d)

Effective
date

The amendments made by this section shall apply to carbon
dioxide captured after the date of the enactment of this Act.

116.

Carbon audit of the tax code

(a)

Study

The Secretary of the Treasury shall enter
into an agreement with the National Academy of Sciences to undertake a
comprehensive review of the Internal Revenue Code of 1986 to identify the types
of and specific tax provisions that have the largest effects on carbon and
other greenhouse gas emissions and to estimate the magnitude of those
effects.

(b)

Report

Not later than 2 years after the date of
enactment of this Act, the National Academy of Sciences shall submit to
Congress a report containing the results of study authorized under this
section.

(c)

Authorization of
appropriations

There is
authorized to be appropriated to carry out this section $1,500,000 for the
period of fiscal years 2009 and 2010.

by striking or D396 in
subparagraph (B) and inserting , D396, or other equivalent standard
approved by the Secretary.

(d)

Eligibility of
certain aviation fuel

Subsection (f) of section 40A (relating to
renewable diesel) is amended by adding at the end the following new
paragraph:

(4)

Certain
aviation fuel

(A)

In
general

Except as provided in the last sentence of paragraph (3),
the term renewable diesel shall include fuel derived from
biomass which meets the requirements of a Department of Defense specification
for military jet fuel or an American Society of Testing and Materials
specification for aviation turbine fuel.

(B)

Application of
mixture credits

In the case of fuel which is treated as renewable
diesel solely by reason of subparagraph (A), subsection (b)(1) and section
6426(c) shall be applied with respect to such fuel by treating kerosene as
though it were diesel
fuel.

.

(e)

Modification of
credit for renewable diesel

Section 40A(f) (relating to renewable
diesel), as amended by subsection (d), is amended by adding at the end the
following new paragraph:

(5)

Special rule
for co-processed renewable diesel

In the case of a taxpayer which
produces renewable diesel through the co-processing of biomass and petroleum at
any facility, this subsection shall not apply to so much of the renewable
diesel produced at such facility and sold or used during the taxable year in a
qualified biodiesel mixture as exceeds 60,000,000
gallons.

.

(f)

Effective date

(1)

In general

Except as otherwise provided in this
subsection, the amendments made by this section shall apply to fuel produced,
and sold or used, after December 31, 2008.

(2)

Coproduction of renewable diesel with
petroleum feedstock

The
amendments made by subsection (e) shall apply to fuel produced, and sold or
used, after the date of the enactment of this Act.

203.

Clarification that credits for fuel are
designed to provide an incentive for United States production

(a)

Alcohol fuels credit

Subsection (d) of section 40 is amended by
adding at the end the following new paragraph:

(7)

Limitation to alcohol with connection to
the United States

No credit
shall be determined under this section with respect to any alcohol which is
produced outside the United States for use as a fuel outside the United States.
For purposes of this paragraph, the term United States includes
any possession of the United
States.

.

(b)

Biodiesel fuels credit

Subsection (d) of section 40A is amended by
adding at the end the following new paragraph:

(5)

Limitation to biodiesel with connection to
the United States

No credit
shall be determined under this section with respect to any biodiesel which is
produced outside the United States for use as a fuel outside the United States.
For purposes of this paragraph, the term United States includes
any possession of the United
States.

.

(c)

Excise tax credit

(1)

In general

Section 6426 is amended by adding at the
end the following new subsection:

(i)

Limitation to fuels with connection to the
United States

(1)

Alcohol

No credit shall be determined under this
section with respect to any alcohol which is produced outside the United States
for use as a fuel outside the United States.

(2)

Biodiesel and alternative
fuels

No credit shall be
determined under this section with respect to any biodiesel or alternative fuel
which is produced outside the United States for use as a fuel outside the
United States.

For purposes of this subsection, the
term United States includes any possession of the United
States.

.

(2)

Conforming amendment

Subsection (e) of section 6427 is amended
by redesignating paragraph (5) as paragraph (6) and by inserting after
paragraph (4) the following new paragraph:

(5)

Limitation to fuels with connection to the
United States

No amount shall
be payable under paragraph (1) or (2) with respect to any mixture or
alternative fuel if credit is not allowed with respect to such mixture or
alternative fuel by reason of section
6426(i).

.

(d)

Effective
date

The amendments made by
this section shall apply to claims for credit or payment made on or after May
15, 2008.

204.

Credit for new
qualified plug-in electric drive motor vehicles

(a)

Plug-In
electric drive motor vehicle credit

Subpart B of part IV of
subchapter A of chapter 1 (relating to other credits) is amended by adding at
the end the following new section:

30D.

New qualified
plug-in electric drive motor vehicles

(a)

Allowance of
credit

(1)

In
general

There shall be allowed as a credit against the tax
imposed by this chapter for the taxable year an amount equal to the applicable
amount with respect to each new qualified plug-in electric drive motor vehicle
placed in service by the taxpayer during the taxable year.

(2)

Applicable
amount

For purposes of paragraph (1), the applicable amount is
sum of—

(A)

$2,500,
plus

(B)

$400 for each
kilowatt hour of traction battery capacity in excess of 6 kilowatt
hours.

(b)

Limitations

(1)

Limitation
based on weight

The amount of the credit allowed under subsection
(a) by reason of subsection (a)(2) shall not exceed—

(A)

$7,500, in the
case of any new qualified plug-in electric drive motor vehicle with a gross
vehicle weight rating of not more than 10,000 pounds,

(B)

$10,000, in the case of any new qualified
plug-in electric drive motor vehicle with a gross vehicle weight rating of more
than 10,000 pounds but not more than 14,000 pounds,

(C)

$12,500, in the case of any new qualified
plug-in electric drive motor vehicle with a gross vehicle weight rating of more
than 14,000 pounds but not more than 26,000 pounds, and

(D)

$15,000, in the case of any new qualified
plug-in electric drive motor vehicle with a gross vehicle weight rating of more
than 26,000 pounds.

(2)

Limitation on
number of passenger vehicles and light trucks eligible for credit

(A)

In
general

In the case of a new qualified plug-in electric drive
motor vehicle sold during the phaseout period, only the applicable percentage
of the credit otherwise allowable under subsection (a) shall be allowed.

(B)

Phaseout
period

For purposes of this subsection, the phaseout period is
the period beginning with the second calendar quarter following the calendar
quarter which includes the first date on which the total number of such new
qualified plug-in electric drive motor vehicles sold for use in the United
States after December 31, 2007, is at least 250,000.

(C)

Applicable
percentage

For purposes of
subparagraph (A), the applicable percentage is—

(i)

50 percent for
the first 2 calendar quarters of the phaseout period,

(ii)

25 percent for
the 3d and 4th calendar quarters of the phaseout period, and

(iii)

0 percent for
each calendar quarter thereafter.

(D)

Controlled
groups

Rules similar to the rules of section 30B(f)(4) shall
apply for purposes of this subsection.

(c)

New qualified
plug-In electric drive motor vehicle

For purposes of this section, the term
new qualified plug-in electric drive motor vehicle means a motor
vehicle—

(1)

which draws propulsion primarily using a
traction battery with at least 6 kilowatt hours of capacity,

(2)

which uses an offboard source of energy to
recharge such battery,

(3)

which, in the case of a passenger vehicle
or light truck which has a gross vehicle weight rating of not more than 8,500
pounds, has received a certificate of conformity under the Clean Air Act and
meets or exceeds the equivalent qualifying California low emission vehicle
standard under section 243(e)(2) of the Clean Air Act for that make and model
year, and

(A)

in the case of a
vehicle having a gross vehicle weight rating of 6,000 pounds or less, the Bin 5
Tier II emission standard established in regulations prescribed by the
Administrator of the Environmental Protection Agency under section 202(i) of
the Clean Air Act for that make and model year vehicle, and

(B)

in the case of a
vehicle having a gross vehicle weight rating of more than 6,000 pounds but not
more than 8,500 pounds, the Bin 8 Tier II emission standard which is so
established,

(4)

the original use
of which commences with the taxpayer,

(5)

which is acquired
for use or lease by the taxpayer and not for resale, and

(6)

which is made by
a manufacturer.

(d)

Application
with other credits

(1)

Business credit
treated as part of general business credit

So much of the credit which would be
allowed under subsection (a) for any taxable year (determined without regard to
this subsection) that is attributable to property of a character subject to an
allowance for depreciation shall be treated as a credit listed in section 38(b)
for such taxable year (and not allowed under subsection (a)).

(2)

Personal
credit

(A)

In
general

For purposes of this title, the credit allowed under
subsection (a) for any taxable year (determined after application of paragraph
(1)) shall be treated as a credit allowable under subpart A for such taxable
year.

(B)

Limitation
based on amount of tax

In the case of a taxable year to which
section 26(a)(2) does not apply, the credit allowed under subsection (a) for
any taxable year (determined after application of paragraph (1)) shall not
exceed the excess of—

(i)

the sum of the
regular tax liability (as defined in section 26(b)) plus the tax imposed by
section 55, over

(ii)

the sum of the
credits allowable under subpart A (other than this section and sections 23 and
25D) and section 27 for the taxable year.

(e)

Other
definitions and special rules

For purposes of this
section—

(1)

Motor
vehicle

The term motor vehicle has the meaning given
such term by section 30(c)(2).

(2)

Other
terms

The terms passenger automobile, light
truck, and manufacturer have the meanings given such terms
in regulations prescribed by the Administrator of the Environmental Protection
Agency for purposes of the administration of title II of the Clean Air Act (42
U.S.C. 7521 et seq.).

(3)

Traction
battery capacity

Traction battery capacity shall be measured in
kilowatt hours from a 100 percent state of charge to a zero percent state of
charge.

(4)

Reduction in
basis

For purposes of this subtitle, the basis of any property
for which a credit is allowable under subsection (a) shall be reduced by the
amount of such credit so allowed.

(5)

No double
benefit

The amount of any deduction or other credit allowable
under this chapter for a new qualified plug-in electric drive motor vehicle
shall be reduced by the amount of credit allowed under subsection (a) for such
vehicle for the taxable year.

(6)

Property used
by tax-exempt entity

In the case of a vehicle the use of which is
described in paragraph (3) or (4) of section 50(b) and which is not subject to
a lease, the person who sold such vehicle to the person or entity using such
vehicle shall be treated as the taxpayer that placed such vehicle in service,
but only if such person clearly discloses to such person or entity in a
document the amount of any credit allowable under subsection (a) with respect
to such vehicle (determined without regard to subsection (b)(2)).

(7)

Property used
outside United States, etc., not qualified

No credit shall be
allowable under subsection (a) with respect to any property referred to in
section 50(b)(1) or with respect to the portion of the cost of any property
taken into account under section 179.

(8)

Recapture

The
Secretary shall, by regulations, provide for recapturing the benefit of any
credit allowable under subsection (a) with respect to any property which ceases
to be property eligible for such credit (including recapture in the case of a
lease period of less than the economic life of a vehicle).

(9)

Election to not
take credit

No credit shall be allowed under subsection (a) for
any vehicle if the taxpayer elects not to have this section apply to such
vehicle.

(10)

Interaction
with air quality and motor vehicle safety standards

Unless
otherwise provided in this section, a motor vehicle shall not be considered
eligible for a credit under this section unless such vehicle is in compliance
with—

(A)

the applicable
provisions of the Clean Air Act for the applicable make and model year of the
vehicle (or applicable air quality provisions of State law in the case of a
State which has adopted such provision under a waiver under section 209(b) of
the Clean Air Act), and

(B)

the motor vehicle
safety provisions of sections 30101 through 30169 of title 49, United States
Code.

(f)

Regulations

(1)

In
general

Except as provided in paragraph (2), the Secretary shall
promulgate such regulations as necessary to carry out the provisions of this
section.

(2)

Coordination in
prescription of certain regulations

The Secretary of the
Treasury, in coordination with the Secretary of Transportation and the
Administrator of the Environmental Protection Agency, shall prescribe such
regulations as necessary to determine whether a motor vehicle meets the
requirements to be eligible for a credit under this section.

(g)

Termination

This
section shall not apply to property purchased after December 31,
2014.

.

(b)

Coordination
with alternative motor vehicle credit

Section 30B(d)(3) is
amended by adding at the end the following new subparagraph:

(D)

Exclusion of
plug-in vehicles

Any vehicle with respect to which a credit is
allowable under section 30D (determined without regard to subsection (d)
thereof) shall not be taken into account under this
section.

.

(c)

Credit made
part of general business credit

Section 38(b) is amended by
striking plus at the end of paragraph (33), by striking the
period at the end of paragraph (34) and inserting plus, and by
adding at the end the following new paragraph:

(35)

the portion of
the new qualified plug-in electric drive motor vehicle credit to which section
30D(d)(1)
applies.

.

(d)

Conforming
amendments

(1)(A)

Section 24(b)(3)(B), as
amended by section 104, is amended by striking and 25D and
inserting 25D, and 30D.

(B)

Section 25(e)(1)(C)(ii) is amended by
inserting 30D, after 25D,.

(C)

Section 25B(g)(2), as amended by
section 104, is amended by striking and 25D and inserting
, 25D, and 30D.

(D)

Section 26(a)(1), as amended by
section 104, is amended by striking and 25D and inserting
25D, and 30D.

(E)

Section 1400C(d)(2) is amended by
striking and 25D and inserting 25D, and
30D.

(2)

Section 1016(a)
is amended by striking and at the end of paragraph (35), by
striking the period at the end of paragraph (36) and inserting ,
and, and by adding at the end the following new paragraph:

(37)

to the extent
provided in section
30D(e)(4).

.

(3)

Section 6501(m)
is amended by inserting 30D(e)(9), after
30C(e)(5),.

(4)

The table of
sections for subpart B of part IV of subchapter A of chapter 1 is amended by
adding at the end the following new item:

Sec. 30D. New qualified plug-in electric
drive motor
vehicles.

.

(e)

Effective
date

Except as otherwise provided in this subsection, the
amendments made by this section shall apply to taxable years beginning after
December 31, 2008.

(f)

Application of
EGTRRA sunset

The amendment made by subsection (d)(1)(A) shall be
subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of
2001 in the same manner as the provision of such Act to which such amendment
relates.

Paragraphs (2) and (3) of section 30B(j) are amended to
read as follows:

(2)

in the case of a
new advanced lean burn technology motor vehicle (as described in subsection
(c)), December 31, 2011,

(3)

in the case
of—

(A)

a new qualified
hybrid motor vehicle (as described in subsection (d)(2)(A)), December 31, 2010,
and

(B)

a new qualified
hybrid motor vehicle (as described in subsection (d)(2)(B)), December 31, 2011,
and

.

(2)

New qualified
alternative fuel vehicles

Paragraph (4) of section 30B(j) is
amended by striking December 31, 2010 and inserting
December 31, 2011.

(b)

Increased
credit for certain new qualified fuel cell motor
vehicles

Subparagraph (A) of section 30B(b)(1) is amended by
striking $4,000 and inserting $7,500.

(c)

Personal credit
allowed against alternative minimum tax

(1)

In
general

Paragraph (2) of section 30B(g) is amended to read as
follows:

(2)

Personal
credit

(A)

In
general

For purposes of this title, the credit allowed under
subsection (a) for any taxable year (determined after application of paragraph
(1)) shall be treated as a credit allowable under subpart A for such taxable
year.

(B)

Limitation
based on amount of tax

In the case of a taxable year to which
section 26(a)(2) does not apply, the credit allowed under subsection (a) (after
the application of paragraph (1)) for any taxable year shall not exceed the
excess (if any) of—

(i)

the sum of the
regular tax liability (as defined in section 26(b)) plus the tax imposed by
section 55, over

(ii)

the sum of the
credits allowable under subpart A (other than this section and sections 23,
25D, and 30D) and section 27 for the taxable
year.

.

(2)

Conforming
amendments

(A)(i)

Section 24(b)(3)(B), as
amended by this Act, is amended by striking and 30D and
inserting 30B, and 30D.

(ii)

Section 25(e)(1)(C)(ii), as
amended by this Act, is amended by inserting 30B, after
25D,.

(iii)

Section 25B(g)(2), as amended by
this Act, is amended by striking and 30D and inserting ,
30B, and 30D.

(iv)

Section 26(a)(1), as amended by
this Act, is amended by striking and 30D and inserting
30B, and 30D.

(v)

Section 1400C(d)(2), as amended by
this Act, is amended by striking and 30D and inserting
30B, and 30D.

(B)

Subparagraph (A) of section 30C(d)(2) is
amended by striking sections 27, 30, and 30B and inserting
sections 27 and 30.

(C)

Section 55(c)(3)
is amended by striking 30B(g)(2),.

(d)

Effective
date

Except as otherwise provided in this subsection, the
amendments made by this section shall apply to taxable years beginning after
December 31, 2008.

(e)

Application of
EGTRRA sunset

The amendment made by subsection (c)(2)(A)(i) shall
be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act
of 2001 in the same manner as the provision of such Act to which such amendment
relates.

Section 4053 is amended by adding at the
end the following new paragraphs:

(9)

Idling reduction device

Any device or system of devices
which—

(A)

is designed to provide to a vehicle those
services (such as heat, air conditioning, or electricity) that would otherwise
require the operation of the main drive engine while the vehicle is temporarily
parked or remains stationary using one or more devices affixed to a tractor,
and

(B)

is determined by the Administrator of the
Environmental Protection Agency, in consultation with the Secretary of Energy
and the Secretary of Transportation, to reduce idling of such vehicle at a
motor vehicle rest stop or other location where such vehicles are temporarily
parked or remain stationary.

(10)

Advanced insulation

Any insulation that has an R value of not
less than R35 per
inch.

.

(b)

Effective
date

The amendment made by
this section shall apply to sales or installations after the date of the
enactment of this Act.

207.

Extension and
modification of alternative fuel credit

(a)

Extension

(1)

Alternative
fuel credit

Paragraph (4) of section 6426(d) (relating to
alternative fuel credit) is amended by striking September 30,
2009 and inserting December 31, 2011.

(2)

Alternative
fuel mixture credit

Paragraph (3) of section 6426(e) (relating to
alternative fuel mixture credit) is amended by striking September 30,
2009 and inserting December 31, 2011.

(3)

Payments

Subparagraph
(C) of section 6427(e)(5) (relating to termination) is amended by striking
September 30, 2009 and inserting December 31,
2011.

(b)

Modifications

(1)

Alternative
fuel to include compressed or liquified biomass gas

Paragraph (2)
of section 6426(d) (relating to alternative fuel credit) is amended by striking
and at the end of subparagraph (E), by redesignating
subparagraph (F) as subparagraph (G), and by inserting after subparagraph (E)
the following new subparagraph:

(F)

compressed or
liquefied biomass gas,
and

.

(2)

Credit allowed
for aviation use of fuel

Paragraph (1) of section 6426(d) is
amended by inserting sold by the taxpayer for use as a fuel in
aviation, after motorboat,.

(c)

Carbon capture
requirement for certain fuels

(1)

In
general

Subsection (d) of section 6426, as amended by subsection
(a), is amended by redesignating paragraph (4) as paragraph (5) and by
inserting after paragraph (3) the following new paragraph:

(4)

Carbon capture
requirement

(A)

In
general

The requirements of this paragraph are met if the fuel is
certified, under such procedures as required by the Secretary, as having been
derived from coal produced at a gasification facility which separates and
sequesters not less than the applicable percentage of such facility's total
carbon dioxide emissions.

(B)

Applicable
percentage

For purposes of subparagraph (A), the applicable
percentage is—

(i)

50 percent in the
case of fuel produced after the date of the enactment of this paragraph and on
or before the earlier of—

(I)

the date the
Secretary makes a determination under subparagraph (C), or

(II)

December 30,
2011, and

(ii)

75 percent in
the case of fuel produced after the date on which the applicable percentage
under clause (i) ceases to apply.

(C)

Determination
to increase applicable percentage before December 31, 2011

If the
Secretary, after considering the recommendations of the Carbon Sequestration
Capability Panel, finds that the applicable percentage under subparagraph (B)
should be 75 percent for fuel produced before December 31, 2011, the Secretary
shall make a determination under this subparagraph. Any determination made
under this subparagraph shall be made not later than 30 days after the
Secretary receives from the Carbon Sequestration Panel the report required
under section 331(c)(3)(D) of the Energy
Independence and Investment Act of
2008.

.

(2)

Conforming
amendment

Subparagraph (E) of section 6426(d)(2) is amended by
inserting which meets the requirements of paragraph (4) and which
is after any liquid fuel.

(3)

Carbon
sequestration capability panel

(A)

Establishment
of panel

There is established a panel to be known as the
Carbon Sequestration Capability Panel (hereafter in this
paragraph referred to as the Panel).

(B)

Membership

The
Panel shall be composed of—

(i)

1
representative from the National Academy of Sciences,

(ii)

1
representative from the University of Kentucky Center for Applied Energy
Research, and

(iii)

1
individual appointed jointly by the representatives under clauses (i) and
(ii).

(C)

Study

The
Panel shall study the appropriate percentage of carbon dioxide for separation
and sequestration under section 6426(d)(4) of the Internal Revenue Code of 1986
consistent with the purposes of such section. The panel shall consider whether
it is feasible to separate and sequester 75 percent of the carbon dioxide
emissions of a facility, including costs and other factors associated with
separating and sequestering such percentage of carbon dioxide emissions.

(D)

Report

Not
later than 6 months after the date of the enactment of this Act, the Panel
shall report to the Secretary of Treasury, the Committee on Finance of the
Senate, and the Committee on Ways and Means of the House of Representatives on
the study under subparagraph (C).

(d)

Effective
date

The amendments made by this section shall apply to fuel sold
or used after the date of the enactment of this Act.

208.

Alternative fuel vehicle refueling property
credit

(a)

Extension of credit

Paragraph (2) of section 30C(g) is amended
by striking December 31, 2009 and inserting December 31,
2012.

(b)

Inclusion of
electricity as a clean-burning fuel

Section 30C(c)(2) is amended
by adding at the end the following new subparagraph:

(C)

Electricity.

.

(c)

Effective
date

The amendments made by
this section shall apply to property placed in service after the date of the
enactment of this Act, in taxable years ending after such date.

209.

Certain income and gains relating to
alcohol fuels and mixtures, biodiesel fuels and mixtures, and alternative fuels
and mixtures treated as qualifying income for publicly traded
partnerships

(a)

In general

Subparagraph (E) of section 7704(d)(1) is
amended by inserting “, or the transportation or storage of any fuel described
in subsection (b), (c), (d), or (e) of section 6426, or any alcohol fuel
defined in section 6426(b)(4)(A) or any biodiesel fuel as defined in section
40A(d)(1)” after timber).

(b)

Effective
date

The amendment made by
this section shall take effect on the date of the enactment of this Act, in
taxable years ending after such date.

210.

Extension of
ethanol production credit

(a)

Credit for
alcohol used as fuel

Section
40 is amended—

(1)

by striking 2010 each place
it appears in subsections (e)(1)(A) and (h) and inserting 2011,
and

(2)

by striking
January 1, 2011 in subsection (e)(1)(B) and inserting
January 1, 2012.

(b)

Excise tax
credits

Paragraph (6) of section 6426(b) is amended by striking
2010 and inserting 2011.

(c)

Payments

Subparagraph
(A) of section 6427(e)(5) is amended by striking 2010 and
inserting 2011.

211.

Credit for
producers of fossil free alcohol

(a)

In
general

Subsection (a) of
section 40 (relating to alcohol used as fuel) is amended by striking
plus at the end of paragraph (3), by striking the period at the
end of paragraph (4) and inserting , plus, and by adding at the
end the following new paragraph:

(5)

the small fossil free alcohol producer
credit.

.

(b)

Small fossil
free alcohol producer credit

Subsection (b) of section 40 is
amended by adding at the end the following new paragraph:

(7)

Small fossil
free alcohol producer credit

(A)

In
general

In addition to any other credit allowed under this
section, there shall be allowed as a credit against the tax imposed by this
chapter for the taxable year an amount equal to 10 cents for each gallon of not
more than 60,000,000 gallons of qualified fossil free alcohol
production.

(B)

Qualified
fossil free alcohol production

For purposes of this section, the
term qualified fossil free alcohol production means alcohol which
is produced by an eligible small fossil free alcohol producer at a fossil free
alcohol production facility and which during the taxable year—

(i)

is sold by the
taxpayer to another person—

(I)

for use by such
other person in the production of a qualified alcohol mixture in such other
person's trade or business (other than casual off-farm production),

(II)

for use by such
other person as a fuel in a trade or business, or

(III)

who sells such
alcohol at retail to another person and places such alcohol in the fuel tank of
such other person, or

(ii)

is used or sold
by the taxpayer for any purpose described in clause (i).

(C)

Additional
distillation excluded

The qualified fossil free alcohol
production of any taxpayer for any taxable year shall not include any alcohol
which is purchased by the taxpayer and with respect to which such producer
increases the proof of the alcohol by additional
distillation.

.

(c)

Eligible small
fossil free alcohol producer

Section 40 is amended by adding at
the end the following new subsection:

(i)

Definitions and
special rules for small fossil free alcohol producer

For purposes
of this section—

(1)

In
general

The term eligible small fossil free alcohol
producer means a person, who at all times during the taxable year, has a
productive capacity for alcohol from all fossil free alcohol production
facilities of the taxpayer which is not in excess of 60,000,000 gallons.

(2)

Fossil free
alcohol production facility

The term fossil free alcohol
production facility means any facility at which 90 percent of the energy
used in the production of alcohol is produced from biomass (as defined in
section 45K(c)(3)).

(3)

Aggregation
rule

For purposes of the 60,000,000 gallon limitation under
paragraph (1) and subsection (b)(7)(A), all members of the same controlled
group of corporations (within the meaning of section 267(f)) and all persons
under common control (within the meaning of section 52(b) but determined by
treating an interest of more than 50 percent as a controlling interest) shall
be treated as 1 person.

(4)

Partnership, S
corporations, and other pass-thru entities

In the case of a
partnership, trust, S corporation, or other pass-thru entity, the limitation
contained in paragraph (1) shall be applied at the entity level and at the
partner or similar level.

(5)

Allocation

For purposes of this subsection, in the case of a
facility in which more than 1 person has an interest, productive capacity shall
be allocated among such persons in such manner as the Secretary may
prescribe.

(6)

Regulations

The
Secretary may prescribe such regulations as may be necessary to prevent the
credit provided for in subsection (a)(5) from directly or indirectly
benefitting any person with a direct or indirect productive capacity of more
than 60,000,000 gallons of alcohol from fossil free alcohol production
facilities during the taxable year.

(7)

Allocation of
small fossil free alcohol producer credit to patrons of
cooperative

Rules similar to the rules under subsection (g)(6)
shall apply for purposes of this
subsection.

.

(d)

Alcohol not
used as a fuel, etc

(1)

In
general

Paragraph (3) of section 40(d) is amended by
redesignating subparagraph (E) as subparagraph (F) and by inserting after
subparagraph (D) the following new subparagraph:

(E)

Small fossil
free alcohol producer credit

If—

(i)

any credit is
allowed under subsection (a)(5), and

(ii)

any person does
not use such fuel for a purpose described in subsection (b)(7)(B),

then
there is hereby imposed on such person a tax equal to 10 cents for each gallon
of such
alcohol.

.

(2)

Conforming
amendment

Subparagraph (F) of section 40(d)(3), as redesignated
by paragraph (1) and amended by this Act, is amended by striking or
(D) and inserting (D), or (E).

(e)

Effective
date

The amendments made by this section shall apply to fuel
produced after December 31, 2008.

by striking
January 1, 2012 in subparagraph (B) and inserting January
1, 2014, and

(2)

by striking
January 1, 2008 each place it appears in subparagraph (F) and
inserting January 1, 2010.

(b)

Inclusion of
fuel derived from shale and tar sands

(1)

In
general

Subsection (d) of section 179C is amended by inserting
, or directly from shale or tar sands after (as defined
in section 45K(c)).

(2)

Conforming
amendment

Paragraph (2) of section 179C(e) is amended by
inserting shale, tar sands, or before qualified
fuels.

(c)

Effective
date

The amendments made by this section shall apply to property
placed in service after the date of the enactment of this Act.

213.

Extension of
suspension of taxable income limit on percentage depletion for oil and natural
gas produced from marginal properties

Subparagraph (H) of section 613A(c)(6)
(relating to oil and gas produced from marginal properties) is amended by
striking January 1, 2008 and inserting January 1,
2011.

III

Energy conservation and efficiency
provisions

301.

Qualified energy conservation
bonds

(a)

In general

Subpart I of part IV of subchapter A of
chapter 1, as amended by section 106, is amended by adding at the end the
following new section:

54D.

Qualified energy conservation
bonds

(a)

Qualified energy conservation
bond

For purposes of this
subchapter, the term qualified energy conservation bond means any
bond issued as part of an issue if—

(1)

100 percent of the available project
proceeds of such issue are to be used for one or more qualified conservation
purposes,

(2)

the bond is issued by a State or local
government, and

(3)

the issuer designates such bond for
purposes of this section.

(b)

Reduced credit amount

The annual credit determined under section
54A(b) with respect to any qualified energy conservation bond shall be 70
percent of the amount so determined without regard to this subsection.

(c)

Limitation on amount of bonds
designated

The maximum
aggregate face amount of bonds which may be designated under subsection (a) by
any issuer shall not exceed the limitation amount allocated to such issuer
under subsection (e).

(d)

National limitation on amount of bonds
designated

There is a
national qualified energy conservation bond limitation of
$3,000,000,000.

(e)

Allocations

(1)

In general

The limitation applicable under subsection
(d) shall be allocated by the Secretary among the States in proportion to the
population of the States.

(2)

Allocations to largest local
governments

(A)

In general

In the case of any State in which there is
a large local government, each such local government shall be allocated a
portion of such State’s allocation which bears the same ratio to the State’s
allocation (determined without regard to this subparagraph) as the population
of such large local government bears to the population of such State.

(B)

Allocation of unused limitation to
State

The amount allocated
under this subsection to a large local government may be reallocated by such
local government to the State in which such local government is located.

(C)

Large local government

For purposes of this section, the term
large local government means any municipality or county if such
municipality or county has a population of 100,000 or more.

(3)

Allocation to issuers; restriction on
private activity bonds

Any
allocation under this subsection to a State or large local government shall be
allocated by such State or large local government to issuers within the State
in a manner that results in not less than 70 percent of the allocation to such
State or large local government being used to designate bonds which are not
private activity bonds.

rural development involving the production
of electricity from renewable energy resources, or

(iv)

any qualified facility (as determined under
section 45(d) without regard to paragraphs (8) and (10) thereof and without
regard to any placed in service date).

(B)

Expenditures with respect to research
facilities, and research grants, to support research in—

(i)

development of cellulosic ethanol or other
nonfossil fuels,

(ii)

technologies for the capture and
sequestration of carbon dioxide produced through the use of fossil
fuels,

(iii)

increasing the efficiency of existing
technologies for producing nonfossil fuels,

(iv)

automobile battery technologies and other
technologies to reduce fossil fuel consumption in transportation, or

(v)

technologies to reduce energy use in
buildings.

(C)

Mass commuting facilities and related
facilities that reduce the consumption of energy, including expenditures to
reduce pollution from vehicles used for mass commuting.

(D)

Demonstration projects designed to promote
the commercialization of—

(i)

green building technology,

(ii)

conversion of agricultural waste for use in
the production of fuel or otherwise,

(iii)

advanced battery manufacturing
technologies,

(iv)

technologies to reduce peak use of
electricity, or

(v)

technologies for the capture and
sequestration of carbon dioxide emitted from combusting fossil fuels in order
to produce electricity.

(E)

Public education campaigns to promote
energy efficiency.

(2)

Special rules for private activity
bonds

For purposes of this
section, in the case of any private activity bond, the term qualified
conservation purposes shall not include any expenditure which is not a
capital expenditure.

(g)

Population

(1)

In general

The population of any State or local
government shall be determined for purposes of this section as provided in
section 146(j) for the calendar year which includes the date of the enactment
of this section.

(2)

Special rule for counties

In determining the population of any county
for purposes of this section, any population of such county which is taken into
account in determining the population of any municipality which is a large
local government shall not be taken into account in determining the population
of such county.

(h)

Application to Indian tribal
governments

An Indian tribal
government shall be treated for purposes of this section in the same manner as
a large local government, except that—

(1)

an Indian tribal government shall be
treated for purposes of subsection (e) as located within a State to the extent
of so much of the population of such government as resides within such State,
and

(2)

any bond issued by an Indian tribal
government shall be treated as a qualified energy conservation bond only if
issued as part of an issue the available project proceeds of which are used for
purposes for which such Indian tribal government could issue bonds to which
section 103(a)
applies.

.

(b)

Conforming amendments

(1)

Paragraph (1) of section 54A(d), as amended
by this Act, is amended to read as follows:

(1)

Qualified tax credit bond

The term qualified tax credit
bond means—

(A)

a qualified forestry conservation
bond,

(B)

a new clean renewable energy bond,
or

(C)

a qualified energy conservation
bond,

which is part of an issue that meets
requirements of paragraphs (2), (3), (4), (5), and
(6).

.

(2)

Subparagraph (C) of section 54A(d)(2), as
amended by this Act, is amended to read as follows:

(C)

Qualified purpose

For purposes of this paragraph, the term
qualified purpose means—

(i)

in the case of a qualified forestry
conservation bond, a purpose specified in section 54B(e),

(ii)

in the case of a new clean renewable energy
bond, a purpose specified in section 54C(a)(1), and

(iii)

in the case of a qualified energy
conservation bond, a purpose specified in section
54D(a)(1).

.

(3)

The table of sections for subpart I of part
IV of subchapter A of chapter 1, as amended by this Act, is amended by adding
at the end the following new item:

Sec. 54D. Qualified
energy conservation
bonds.

.

(c)

Effective
date

The amendments made by
this section shall apply to obligations issued after the date of the enactment
of this Act.

302.

Credit for nonbusiness energy
property

(a)

Extension of credit

Section 25C(g) is amended by striking
placed in service after December 31, 2007 and inserting “placed
in service—

(1)

after December
31, 2007, and before January 1, 2009, or

(2)

after December
31,
2011.

.

(b)

Qualified biomass fuel property

(1)

In general

Section 25C(d)(3) is amended—

(A)

by striking and at the end
of subparagraph (D),

(B)

by striking the period at the end of
subparagraph (E) and inserting , and, and

(C)

by adding at the end the following new
subparagraph:

(F)

a stove which uses the burning of biomass
fuel to heat a dwelling unit located in the United States and used as a
residence by the taxpayer, or to heat water for use in such a dwelling unit,
and which has a thermal efficiency rating of at least 75
percent.

.

(2)

Biomass fuel

Section 25C(d) is amended by adding at the
end the following new paragraph:

(6)

Biomass fuel

The term biomass fuel means
any plant-derived fuel available on a renewable or recurring basis, including
agricultural crops and trees, wood and wood waste and residues (including wood
pellets), plants (including aquatic plants), grasses, residues, and
fibers.

.

(c)

Modification of water heater
requirements

Section
25C(d)(3)(E) is amended by inserting or a thermal efficiency of at least
90 percent after 0.80.

Paragraph (3) of section 25C(d), as amended
by subsections (b) and (c), is amended by striking subparagraph (C) and by
redesignating subparagraphs (D), (E), and (F) as subparagraphs (C), (D), and
(E), respectively.

(2)

Conforming amendment

Subparagraph (C) of section 25C(d)(2) is
amended to read as follows:

(C)

Requirements and standards for air
conditioners and heat pumps

The standards and requirements prescribed
by the Secretary under subparagraph (B) with respect to the energy efficiency
ratio (EER) for central air conditioners and electric heat pumps—

(i)

shall require measurements to be based on
published data which is tested by manufacturers at 95 degrees Fahrenheit,
and

(ii)

may be based on the certified data of the
Air Conditioning and Refrigeration Institute that are prepared in partnership
with the Consortium for Energy
Efficiency.

.

(e)

Modification of qualified energy efficiency
improvements

(1)

In general

Paragraph (1) of section 25C(c) is amended
by inserting , or an asphalt roof with appropriate cooling
granules, before which meet the Energy Star program
requirements.

(2)

Building envelope component

Subparagraph (D) of section 25C(c)(2) is
amended—

(A)

by inserting or asphalt roof
after metal roof, and

(B)

by inserting or cooling
granules after pigmented coatings.

(f)

Effective dates

(1)

In general

Except as provided in paragraph (2), the
amendments made this section shall apply to expenditures made after December
31, 2008.

(2)

Modification of qualified energy efficiency
improvements

The amendments
made by subsection (e) shall apply to property placed in service after the date
of the enactment of this Act.

303.

Energy efficient commercial buildings
deduction

Subsection (h) of
section 179D is amended by striking December 31, 2008 and
inserting December 31, 2013.

304.

New energy efficient
home credit

Subsection (g) of
section 45L (relating to termination) is amended by striking December
31, 2008 and inserting December 31, 2011.

305.

Modifications of energy efficient appliance
credit for appliances produced after 2007

(a)

In general

Subsection (b) of section 45M is amended to
read as follows:

(b)

Applicable amount

For purposes of subsection (a)—

(1)

Dishwashers

The applicable amount is—

(A)

$45 in the case of a dishwasher which is
manufactured in calendar year 2008 or 2009 and which uses no more than 324
kilowatt hours per year and 5.8 gallons per cycle, and

(B)

$75 in the case of a dishwasher which is
manufactured in calendar year 2008, 2009, or 2010 and which uses no more than
307 kilowatt hours per year and 5.0 gallons per cycle (5.5 gallons per cycle
for dishwashers designed for greater than 12 place settings).

(2)

Clothes washers

The applicable amount is—

(A)

$75 in the case of a residential
top-loading clothes washer manufactured in calendar year 2008 which meets or
exceeds a 1.72 modified energy factor and does not exceed a 8.0 water
consumption factor,

(B)

$125 in the case of a residential
top-loading clothes washer manufactured in calendar year 2008 or 2009 which
meets or exceeds a 1.8 modified energy factor and does not exceed a 7.5 water
consumption factor,

(C)

$150 in the case of a residential or
commercial clothes washer manufactured in calendar year 2008, 2009, or 2010
which meets or exceeds 2.0 modified energy factor and does not exceed a 6.0
water consumption factor, and

(D)

$250 in the case of a residential or
commercial clothes washer manufactured in calendar year 2008, 2009, or 2010
which meets or exceeds 2.2 modified energy factor and does not exceed a 4.5
water consumption factor.

(3)

Refrigerators

The applicable amount is—

(A)

$50 in the case of a refrigerator which is
manufactured in calendar year 2008, and consumes at least 20 percent but not
more than 22.9 percent less kilowatt hours per year than the 2001 energy
conservation standards,

(B)

$75 in the case of a refrigerator which is
manufactured in calendar year 2008 or 2009, and consumes at least 23 percent
but no more than 24.9 percent less kilowatt hours per year than the 2001 energy
conservation standards,

(C)

$100 in the case of a refrigerator which is
manufactured in calendar year 2008, 2009, or 2010, and consumes at least 25
percent but not more than 29.9 percent less kilowatt hours per year than the
2001 energy conservation standards, and

(D)

$200 in the case of a refrigerator
manufactured in calendar year 2008, 2009, or 2010 and which consumes at least
30 percent less energy than the 2001 energy conservation
standards.

.

(b)

Eligible production

(1)

Similar treatment for all
appliances

Subsection (c) of
section 45M is amended—

(A)

by striking paragraph (2),

(B)

by striking (1)
In
general and all that follows through the
eligible and inserting The eligible,

(C)

by moving the text of such subsection in
line with the subsection heading, and

(D)

by redesignating subparagraphs (A) and (B)
as paragraphs (1) and (2), respectively, and by moving such paragraphs 2 ems to
the left.

(2)

Modification of base period

Paragraph (2) of section 45M(c), as amended
by paragraph (1), is amended by striking 3-calendar year and
inserting 2-calendar year.

(c)

Types of energy efficient
appliances

Subsection (d) of
section 45M is amended to read as follows:

(d)

Types of energy efficient
appliance

For purposes of
this section, the types of energy efficient appliances are—

(1)

dishwashers described in subsection
(b)(1),

(2)

clothes washers described in subsection
(b)(2), and

(3)

refrigerators described in subsection
(b)(3).

.

(d)

Aggregate credit amount allowed

(1)

Increase in limit

Paragraph (1) of section 45M(e) is amended
to read as follows:

(1)

Aggregate credit amount
allowed

The aggregate amount
of credit allowed under subsection (a) with respect to a taxpayer for any
taxable year shall not exceed $75,000,000 reduced by the amount of the credit
allowed under subsection (a) to the taxpayer (or any predecessor) for all prior
taxable years beginning after December 31,
2007.

.

(2)

Exception for certain refrigerator and
clothes washers

Paragraph (2)
of section 45M(e) is amended to read as follows:

(2)

Amount allowed for certain refrigerators
and clothes washers

Refrigerators described in subsection
(b)(3)(D) and clothes washers described in subsection (b)(2)(D) shall not be
taken into account under paragraph
(1).

.

(e)

Qualified energy efficient
appliances

(1)

In general

Paragraph (1) of section 45M(f) is amended
to read as follows:

(1)

Qualified energy efficient
appliance

The term
qualified energy efficient appliance means—

(A)

any dishwasher described in subsection
(b)(1),

(B)

any clothes washer described in subsection
(b)(2), and

(C)

any refrigerator described in subsection
(b)(3).

.

(2)

Clothes
washer

Section 45M(f)(3) is
amended by inserting commercial before
residential the second place it appears.

(3)

Top-loading clothes washer

Subsection (f) of section 45M is amended by
redesignating paragraphs (4), (5), (6), and (7) as paragraphs (5), (6), (7),
and (8), respectively, and by inserting after paragraph (3) the following new
paragraph:

(4)

Top-loading clothes washer

The term top-loading clothes
washer means a clothes washer which has the clothes container
compartment access located on the top of the machine and which operates on a
vertical
axis.

.

(4)

Replacement of energy factor

Section 45M(f)(6), as redesignated by
paragraph (3), is amended to read as follows:

(6)

Modified energy factor

The term modified energy
factor means the modified energy factor established by the Department of
Energy for compliance with the Federal energy conservation
standard.

.

(5)

Gallons per cycle; water consumption
factor

Section 45M(f), as
amended by paragraph (3), is amended by adding at the end the following:

(9)

Gallons per cycle

The term gallons per cycle
means, with respect to a dishwasher, the amount of water, expressed in gallons,
required to complete a normal cycle of a dishwasher.

(10)

Water consumption factor

The term water consumption
factor means, with respect to a clothes washer, the quotient of the
total weighted per-cycle water consumption divided by the cubic foot (or liter)
capacity of the clothes
washer.

.

(f)

Effective
date

The amendments made by
this section shall apply to appliances produced after December 31, 2007.

306.

Accelerated recovery period for
depreciation of smart meters and smart grid systems

(a)

In general

Section 168(e)(3)(C) is amended by striking
and at the end of clause (iv), by redesignating clause (v) as
clause (vii), and by inserting after clause (iv) the following new
clauses:

(v)

any qualified smart electric meter,

(vi)

any qualified smart electric grid system,
and

.

(b)

Definitions

Section 168(i) is amended by inserting at
the end the following new paragraph:

(18)

Qualified smart electric meters

(A)

In general

The term qualified smart electric
meter means any smart electric meter which is placed in service by a
taxpayer who is a supplier of electric energy or a provider of electric energy
services.

(B)

Smart electric meter

For purposes of subparagraph (A), the term
smart electric meter means any time-based meter and related
communication equipment which is capable of being used by the taxpayer as part
of a system that—

(i)

measures and records electricity usage data
on a time-differentiated basis in at least 24 separate time segments per
day,

(ii)

provides for the exchange of information
between supplier or provider and the customer’s electric meter in support of
time-based rates or other forms of demand response,

(iii)

provides data to such supplier or provider
so that the supplier or provider can provide energy usage information to
customers electronically, and

(iv)

provides net metering.

(19)

Qualified smart electric grid
systems

(A)

In general

The term qualified smart electric
grid system means any smart grid property used as part of a system for
electric distribution grid communications, monitoring, and management placed in
service by a taxpayer who is a supplier of electric energy or a provider of
electric energy services.

(B)

Smart grid property

For the purposes of subparagraph (A), the
term smart grid property means electronics and related equipment
that is capable of—

(i)

sensing, collecting, and monitoring data of
or from all portions of a utility’s electric distribution grid,

(ii)

providing real-time, two-way communications
to monitor or manage such grid, and

(iii)

providing real time analysis of and event
prediction based upon collected data that can be used to improve electric
distribution system reliability, quality, and
performance.

.

(c)

Continued application of 150 percent
declining balance method

Paragraph (2) of section 168(b) is amended
by striking or at the end of subparagraph (B), by redesignating
subparagraph (C) as subparagraph (D), and by inserting after subparagraph (B)
the following new subparagraph:

(C)

any property (other than property described
in paragraph (3)) which is a qualified smart electric meter or qualified smart
electric grid system,
or

.

(d)

Effective
date

The amendments made by
this section shall apply to property placed in service after the date of the
enactment of this Act.

307.

Qualified green building and sustainable
design projects

(a)

In general

Paragraph (8) of section 142(l) is amended
by striking September 30, 2009 and inserting September
30, 2012.

(b)

Treatment of current refunding
bonds

Paragraph (9) of
section 142(l) is amended by striking October 1, 2009 and
inserting October 1, 2012.

(c)

Accountability

The second sentence of section 701(d) of
the American Jobs Creation Act of 2004 is amended by striking
issuance, and inserting issuance of the last issue with
respect to such project,.

308.

Special depreciation allowance for certain
reuse and recycling property

(a)

In general

Section 168 is amended by adding at the end
the following new subsection:

(m)

Special allowance for certain reuse and
recycling property

(1)

In general

In the case of any qualified reuse and
recycling property—

(A)

the depreciation deduction provided by
section 167(a) for the taxable year in which such property is placed in service
shall include an allowance equal to 50 percent of the adjusted basis of the
qualified reuse and recycling property, and

(B)

the adjusted basis of the qualified reuse
and recycling property shall be reduced by the amount of such deduction before
computing the amount otherwise allowable as a depreciation deduction under this
chapter for such taxable year and any subsequent taxable year.

(2)

Qualified reuse and recycling
property

For purposes of this
subsection—

(A)

In general

The term qualified reuse and
recycling property means any reuse and recycling property—

(i)

to which this section applies,

(ii)

which has a useful life of at least 5
years,

(iii)

the original use of which commences with
the taxpayer after August 31, 2008, and

(iv)

which is—

(I)

acquired by purchase (as defined in section
179(d)(2)) by the taxpayer after August 31, 2008, but only if no written
binding contract for the acquisition was in effect before September 1, 2008,
or

(II)

acquired by the taxpayer pursuant to a
written binding contract which was entered into after August 31, 2008.

(B)

Exceptions

(i)

Bonus depreciation property under
subsection (k)

The term qualified reuse and
recycling property shall not include any property to which section
168(k) applies.

(ii)

Alternative depreciation
property

The term
qualified reuse and recycling property shall not include any
property to which the alternative depreciation system under subsection (g)
applies, determined without regard to paragraph (7) of subsection (g) (relating
to election to have system apply).

(iii)

Election out

If a taxpayer makes an election under this
clause with respect to any class of property for any taxable year, this
subsection shall not apply to all property in such class placed in service
during such taxable year.

(C)

Special rule for self-constructed
property

In the case of a
taxpayer manufacturing, constructing, or producing property for the taxpayer's
own use, the requirements of clause (iv) of subparagraph (A) shall be treated
as met if the taxpayer begins manufacturing, constructing, or producing the
property after August 31, 2008.

(D)

Deduction allowed in computing minimum
tax

For purposes of
determining alternative minimum taxable income under section 55, the deduction
under subsection (a) for qualified reuse and recycling property shall be
determined under this section without regard to any adjustment under section
56.

(3)

Definitions

For purposes of this subsection—

(A)

Reuse and recycling property

(i)

In general

The term reuse and recycling
property means any machinery and equipment (not including buildings or
real estate), along with all appurtenances thereto, including software
necessary to operate such equipment, which is used exclusively to collect,
distribute, or recycle qualified reuse and recyclable materials.

(ii)

Exclusion

Such term does not include rolling stock or
other equipment used to transport reuse and recyclable materials.

any cathode ray tube, flat panel screen, or
similar video display device with a screen size greater than 4 inches measured
diagonally, or

(II)

any central processing unit.

(C)

Recycling or recycle

The term recycling or
recycle means that process (including sorting) by which worn or
superfluous materials are manufactured or processed into specification grade
commodities that are suitable for use as a replacement or substitute for virgin
materials in manufacturing tangible consumer and commercial products, including
packaging.

.

(b)

Effective
date

The amendment made by
this section shall apply to property placed in service after August 31,
2008.

IV

Miscellaneous
energy provisions

401.

Special rule to implement FERC and State
electric restructuring policy

(a)

Extension for qualified electric
utilities

(1)

In general

Paragraph (3) of section 451(i) is amended
by inserting (before January 1, 2010, in the case of a qualified
electric utility) after January 1, 2008.

(2)

Qualified electric utility

Subsection (i) of section 451 is amended by
redesignating paragraphs (6) through (10) as paragraphs (7) through (11),
respectively, and by inserting after paragraph (5) the following new
paragraph:

(6)

Qualified electric utility

For purposes of this subsection, the term
qualified electric utility means a person that, as of the date
of the qualifying electric transmission transaction, is vertically integrated,
in that it is both—

(A)

a transmitting utility (as defined in
section 3(23) of the Federal Power Act (16 U.S.C. 796(23))) with respect to the
transmission facilities to which the election under this subsection applies,
and

(B)

an electric utility (as defined in section
3(22) of the Federal Power Act (16 U.S.C.
796(22))).

.

(b)

Extension of period for transfer of
operational control authorized by FERC

Clause (ii) of section 451(i)(4)(B) is
amended by striking December 31, 2007 and inserting the
date which is 4 years after the close of the taxable year in which the
transaction occurs.

(c)

Property located outside the united states
not treated as exempt utility property

Paragraph (5) of section 451(i) is amended
by adding at the end the following new subparagraph:

(C)

Exception for property located outside the
united states

The term
exempt utility property shall not include any property which is
located outside the United
States.

.

(d)

Effective Dates

(1)

Extension

The amendments made by subsection (a) shall
apply to transactions after December 31, 2007.

(2)

Transfers of operational
control

The amendment made by
subsection (b) shall take effect as if included in section 909 of the American
Jobs Creation Act of 2004.

(3)

Exception for property located outside the
united states

The amendment
made by subsection (c) shall apply to transactions after the date of the
enactment of this Act.

402.

Modification
of credit for production from advanced nuclear power facilities

(a)

In
general

Paragraph (2) of section 45J(b) (relating to national
limitation) is amended by striking 6,000 megawatts and inserting
8,000 megawatts.

(b)

Allocation of
credit to private partners of tax-exempt entities

(1)

In
general

Section 45J (relating to credit for production from
advanced nuclear power facilities) is amended—

(A)

by redesignating
subsection (e) as subsection (f), and

(B)

by inserting
after subsection (d) the following new subsection:

(e)

Special rule
for public-private partnerships

(1)

In
general

In the case of an advanced nuclear power facility which
is owned by a public-private partnership, any qualified public entity which is
a member of such partnership may transfer such entity's allocation of the
credit under subsection (a) to any non-public entity which is a member of such
partnership, except that the aggregate allocations of such credit claimed by
such non-public entity shall be subject to the limitations under subsections
(b) and (c) and section 38(c).

(2)

Qualified
public entity

For purposes of this subsection, the term
qualified public entity means a Federal, State, or local
government entity, or any political subdivision thereof, or a cooperative
organization described in section 1381(a).

(3)

Verification of
transfer of allocation

A qualified public entity that makes a
transfer under paragraph (1), and a non-public entity that receives an
allocation under such a transfer, shall provide verification of such transfer
in such manner and at such time as the Secretary shall
prescribe.

.

(2)

Coordination
with general business credit

Subsection (c) of section 38
(relating to limitation based on amount of tax) is amended by adding at the end
the following new paragraph:

(6)

Special rule
for credit for production from advanced nuclear power facilities

(A)

In
general

In the case of the credit for production from advanced
nuclear power facilities determined under section 45J(a), paragraph (1) shall
not apply with respect to any qualified public entity (as defined in section
45J(e)(2)) which transfers the entity's allocation of such credit to a
non-public partner as provided in section 45J(e)(1).

(B)

Verification of
transfer

Subparagraph (A) shall not apply to any qualified public
entity unless such entity provides verification of a transfer of credit
allocation as required under section
45J(e)(3).

.

(c)

Effective
date

(1)

In
general

The amendment made by subsection (a) shall apply to
electricity produced in taxable years beginning after the date of the enactment
of this Act.

(2)

Allocation of
credit

The amendments made by subsection (b) shall apply to
taxable years beginning after the date of the enactment of this Act.

403.

Income averaging for amounts received in
connection with the Exxon Valdez litigation

(a)

Income averaging of amounts received from
the Exxon Valdez litigation

For purposes of section 1301 of the
Internal Revenue Code of 1986—

(1)

any qualified
taxpayer who receives any qualified settlement income in any taxable year shall
be treated as engaged in a fishing business (determined without regard to the
commercial nature of the business), and

(2)

such qualified
settlement income shall be treated as income attributable to such a fishing
business for such taxable year.

(b)

Contributions of amounts received to
retirement accounts

(1)

In general

Any qualified taxpayer who receives
qualified settlement income during the taxable year may, at any time before the
end of the taxable year in which such income was received, make one or more
contributions to an eligible retirement plan of which such qualified taxpayer
is a beneficiary in an aggregate amount not to exceed the lesser of—

(A)

$100,000 (reduced by the amount of
qualified settlement income contributed to an eligible retirement plan in prior
taxable years pursuant to this subsection), or

(B)

the amount of qualified settlement income
received by the individual during the taxable year.

(2)

Time when contributions deemed
made

For purposes of
paragraph (1), a qualified taxpayer shall be deemed to have made a contribution
to an eligible retirement plan on the last day of the taxable year in which
such income is received if the contribution is made on account of such taxable
year and is made not later than the time prescribed by law for filing the
return for such taxable year (not including extensions thereof).

(3)

Treatment of contributions to eligible
retirement plans

For purposes
of the Internal Revenue Code of 1986, if a contribution is made pursuant to
paragraph (1) with respect to qualified settlement income, then—

(A)

except as provided in paragraph (4)—

(i)

to the extent of such contribution, the
qualified settlement income shall not be included in taxable income, and

(ii)

for purposes of section 72 of such Code,
such contribution shall not be considered to be investment in the
contract,

(B)

the qualified taxpayer shall, to the extent
of the amount of the contribution, be treated—

(i)

as having received the qualified settlement
income—

(I)

in the case of a contribution to an
individual retirement plan (as defined under section 7701(a)(37) of such Code),
in a distribution described in section 408(d)(3) of such Code, and

(II)

in the case of any other eligible
retirement plan, in an eligible rollover distribution (as defined under section
402(f)(2) of such Code), and

(ii)

as having transferred the amount to the
eligible retirement plan in a direct trustee to trustee transfer within 60 days
of the distribution,

(C)

section
408(d)(3)(B) of the Internal Revenue Code of 1986 shall not apply with respect
to amounts treated as a rollover under this paragraph, and

(D)

section
408A(c)(3)(B) of the Internal Revenue Code of 1986 shall not apply with respect
to amounts contributed to a Roth IRA (as defined under section 408A(b) of such
Code) or a designated Roth contribution to an applicable retirement plan
(within the meaning of section 402A of such Code) under this paragraph.

(4)

Special rule for Roth IRAs and Roth
401(k)s

For purposes of the Internal Revenue Code
of 1986, if a contribution is made pursuant to paragraph (1) with respect to
qualified settlement income to a Roth IRA (as defined under section 408A(b) of
such Code) or as a designated Roth contribution to an applicable retirement
plan (within the meaning of section 402A of such Code), then—

(A)

the qualified settlement income shall be
includible in taxable income, and

(B)

for purposes of section 72 of such Code,
such contribution shall be considered to be investment in the contract.

(5)

Eligible retirement plan

For purpose of this subsection, the term
eligible retirement plan has the meaning given such term under
section 402(c)(8)(B) of the Internal Revenue Code of 1986.

(c)

Treatment of qualified settlement income
under employment taxes

(1)

SECA

For purposes of chapter 2 of the Internal
Revenue Code of 1986 and section 211 of the Social Security Act, no portion of
qualified settlement income received by a qualified taxpayer shall be treated
as self-employment income.

(2)

FICA

For
purposes of chapter 21 of the Internal Revenue Code of 1986 and section 209 of
the Social Security Act, no portion of qualified settlement income received by
a qualified taxpayer shall be treated as wages.

(d)

Qualified taxpayer

For purposes of this section, the term
qualified taxpayer means—

(1)

any individual who is a plaintiff in the
civil action In re Exxon
Valdez, No. 89–095–CV (HRH) (Consolidated) (D. Alaska);
or

(2)

any individual who is a beneficiary of the
estate of such a plaintiff who—

(A)

acquired the right to receive qualified
settlement income from that plaintiff; and

(B)

was the spouse or an immediate relative of
that plaintiff.

(e)

Qualified settlement income

For purposes of this section, the term
qualified settlement income means any interest and punitive damage
awards which are—

(1)

otherwise includible in taxable income,
and

(2)

received (whether as lump sums or periodic
payments) in connection with the civil action
In re Exxon
Valdez, No. 89–095–CV (HRH) (Consolidated) (D. Alaska) (whether
pre- or post-judgment and whether related to a settlement or judgment).

V

Revenue
provisions

501.

Limitation of
deduction for income attributable to domestic production of oil, gas, or
primary products thereof

(a)

Denial of
deduction for major integrated oil companies and State-owned oil companies for
income attributable to domestic production of oil, gas, or primary products
thereof

(1)

In
general

Subparagraph (B) of section 199(c)(4) of the Internal
Revenue Code of 1986 (relating to exceptions) is amended by striking
or at the end of clause (ii), by striking the period at the end
of clause (iii) and inserting , or, and by inserting after
clause (iii) the following new clause:

(iv)

in the case of any disqualified oil
company, the production, refining, processing, transportation, or distribution
of oil, gas, or any primary product
thereof.

.

(2)

Disqualified oil
company

Section 199(c) of such Code is
amended by adding at the end the following new paragraph:

(8)

Disqualified
oil company

(A)

In
general

The term disqualified oil company
means—

(i)

any major
integrated oil company (as defined in section 167(h)(5)(B)) during any taxable
year described in section 167(h)(5)(B), or

(ii)

any controlled
commercial entity (as defined in section 892(a)(2)(B)) the commercial
activities of which during the taxable year includes the production, refining,
processing, transportation, or distribution of oil, gas, or any primary product
thereof.

(B)

Primary
product

The term primary product has the same
meaning as when used in section 927(a)(2)(C), as in effect before its
repeal.

.

(b)

Limitation on
oil related qualified production activities income for taxpayers other than
major integrated oil companies and State-owned oil companies

(1)

In
general

Section 199(d) of the Internal
Revenue Code of 1986 is amended by redesignating paragraph (9) as paragraph
(10) and by inserting after paragraph (8) the following new paragraph:

(9)

Special rule for
taxpayers with oil related qualified production activities income

(A)

In
general

If a taxpayer (other than a disqualified oil company) has
oil related qualified production activities income for any taxable year
beginning after 2009, the amount otherwise allowable as a deduction under
subsection (a) shall be reduced by 3 percent of the least of—

(i)

the oil related
qualified production activities income of the taxpayer for the taxable
year,

(ii)

the qualified
production activities income of the taxpayer for the taxable year, or

(iii)

taxable income
(determined without regard to this section).

(B)

Oil related
qualified production activities income

The term oil related
qualified production activities income means for any taxable year the
qualified production activities income which is attributable to the production,
refining, processing, transportation, or distribution of oil, gas, or any
primary product thereof during such taxable
year.

.

(2)

Conforming
amendment

Section 199(d)(2) of such Code (relating to application
to individuals) is amended by striking subsection (a)(1)(B) and
inserting subsections (a)(1)(B) and (d)(9)(A)(iii).

(c)

Effective
date

The amendments made by this section shall apply to taxable
years beginning after December 31, 2008.

502.

Tax on crude oil and
natural gas produced from the outer Continental Shelf in the Gulf of
Mexico

(a)

In
general

Subtitle E (relating to alcohol, tobacco, and certain
other excise taxes) is amended by adding at the end the following new
chapter:

56

Tax on severance
of crude oil and natural gas from the outer Continental Shelf in the Gulf of
Mexico

Sec. 5896. Imposition of
tax.

Sec. 5897. Taxable crude oil or natural
gas and removal price.

Sec. 5898. Special rules and
definitions.

5896.

Imposition of
tax

(a)

In
general

In addition to any other tax imposed under this title,
there is hereby imposed a tax equal to 13 percent of the removal price of any
taxable crude oil or natural gas removed from the premises during any taxable
period.

(b)

Credit for
Federal royalties paid

(1)

In
general

There shall be allowed as a credit against the tax
imposed by subsection (a) with respect to the production of any taxable crude
oil or natural gas an amount equal to the aggregate amount of royalties paid
under Federal law with respect to such production.

(2)

Limitation

The
aggregate amount of credits allowed under paragraph (1) to any taxpayer for any
taxable period shall not exceed the amount of tax imposed by subsection (a) for
such taxable period.

(c)

Tax paid by
producer

The tax imposed by this section shall be paid by the
producer of the taxable crude oil or natural gas.

5897.

Taxable crude
oil or natural gas and removal price

(a)

Taxable crude
oil or natural gas

For purposes of this chapter, the term
taxable crude oil or natural gas means crude oil or natural gas
which is produced from Federal submerged lands on the outer Continental Shelf
in the Gulf of Mexico pursuant to a lease entered into with the United States
which authorizes the production.

(b)

Removal
price

For purposes of this chapter—

(1)

In
general

Except as otherwise provided in this subsection, the term
removal price means—

(A)

in the case of
taxable crude oil, the amount for which a barrel of such crude oil is sold,
and

(B)

in the case of
taxable natural gas, the amount per 1,000 cubic feet for which such natural gas
is sold.

(2)

Sales between
related persons

In the case of a sale between related persons,
the removal price shall not be less than the constructive sales price for
purposes of determining gross income from the property under section
613.

(3)

Oil or gas
removed from property before sale

If crude oil or natural gas is
removed from the property before it is sold, the removal price shall be the
constructive sales price for purposes of determining gross income from the
property under section 613.

(4)

Refining begun
on property

If the manufacture or conversion of crude oil into
refined products begins before such oil is removed from the property—

(A)

such oil shall be
treated as removed on the day such manufacture or conversion begins, and

(B)

the removal price
shall be the constructive sales price for purposes of determining gross income
from the property under section 613.

(5)

Property

The
term property has the meaning given such term by section
614.

5898.

Special rules
and definitions

(a)

Administrative
requirements

(1)

Withholding and
deposit of tax

The Secretary shall provide for the withholding
and deposit of the tax imposed under section 5896 on a quarterly basis.

(2)

Records and
information

Each taxpayer liable for tax under section 5896 shall
keep such records, make such returns, and furnish such information (to the
Secretary and to other persons having an interest in the taxable crude oil or
natural gas) with respect to such oil as the Secretary may by regulations
prescribe.

(3)

Taxable
periods; return of tax

(A)

Taxable
period

Except as provided by the Secretary, each calendar year
shall constitute a taxable period.

(B)

Returns

The
Secretary shall provide for the filing, and the time for filing, of the return
of the tax imposed under section 5896.

(b)

Definitions

For
purposes of this chapter—

(1)

Producer

The
term producer means the holder of the economic interest with
respect to the crude oil or natural gas.

(2)

Crude
oil

The term crude oil includes crude oil
condensates and natural gasoline.

(3)

Premises and
crude oil product

The terms premises and crude
oil product have the same meanings as when used for purposes of
determining gross income from the property under section 613.

(c)

Adjustment of
removal price

In determining the removal price of oil or natural
gas from a property in the case of any transaction, the Secretary may adjust
the removal price to reflect clearly the fair market value of oil or natural
gas removed.

(d)

Regulations

The
Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this
chapter.

.

(b)

Deductibility
of tax

The first sentence of section 164(a) (relating to
deduction for taxes) is amended by inserting after paragraph (5) the following
new paragraph:

(6)

The tax imposed
by section 5896(a) (after application of section 5896(b)) on the severance of
crude oil or natural gas from the outer Continental Shelf in the Gulf of
Mexico.

.

(c)

Clerical
amendment

The table of chapters for subtitle E is amended by
adding at the end the following new item:

Chapter 56. Tax on severance of crude oil
and natural gas from the outer Continental Shelf in the Gulf of
Mexico.

.

(d)

Effective
date

The amendments made by this section shall apply to crude oil
or natural gas removed after December 31, 2008.

503.

Elimination of
the different treatment of foreign oil and gas extraction income and foreign
oil related income for purposes of the foreign tax credit

(a)

In
general

Subsections (a) and (b) of section 907 (relating to
special rules in case of foreign oil and gas income) are amended to read as
follows:

(a)

Reduction in
amount allowed as foreign tax under section 901

In applying
section 901, the amount of any foreign oil and gas taxes paid or accrued (or
deemed to have been paid) during the taxable year which would (but for this
subsection) be taken into account for purposes of section 901 shall be reduced
by the amount (if any) by which the amount of such taxes exceeds the product
of—

(1)

the amount of the
combined foreign oil and gas income for the taxable year,

(2)

multiplied
by—

(A)

in the case of a
corporation, the percentage which is equal to the highest rate of tax specified
under section 11(b), or

(B)

in the case of an
individual, a fraction the numerator of which is the tax against which the
credit under section 901(a) is taken and the denominator of which is the
taxpayer's entire taxable income.

(b)

Combined
foreign oil and gas income; foreign oil and gas taxes

For
purposes of this section—

(1)

Combined
foreign oil and gas income

The term combined foreign oil
and gas income means, with respect to any taxable year, the sum
of—

(A)

foreign oil and
gas extraction income, and

(B)

foreign oil
related income.

(2)

Foreign oil and
gas taxes

The term foreign oil and gas taxes means,
with respect to any taxable year, the sum of—

(A)

oil and gas
extraction taxes, and

(B)

any income, war
profits, and excess profits taxes paid or accrued (or deemed to have been paid
or accrued under section 902 or 960) during the taxable year with respect to
foreign oil related income (determined without regard to subsection (c)(4)) or
loss which would be taken into account for purposes of section 901 without
regard to this
section.

.

(b)

Recapture of
foreign oil and gas losses

Paragraph (4) of section 907(c)
(relating to recapture of foreign oil and gas extraction losses by
recharacterizing later extraction income) is amended to read as follows:

(4)

Recapture of
foreign oil and gas losses by recharacterizing later combined foreign oil and
gas income

(A)

In
general

The combined foreign oil and gas income of a taxpayer for
a taxable year (determined without regard to this paragraph) shall be
reduced—

(i)

first by the
amount determined under subparagraph (B), and

(ii)

then by the
amount determined under subparagraph (C).

The
aggregate amount of such reductions shall be treated as income (from sources
without the United States) which is not combined foreign oil and gas
income.(B)

Reduction for
pre-2009 foreign oil extraction losses

The reduction under this
paragraph shall be equal to the lesser of—

(i)

the foreign oil
and gas extraction income of the taxpayer for the taxable year (determined
without regard to this paragraph), or

(ii)

the excess
of—

(I)

the aggregate
amount of foreign oil extraction losses for preceding taxable years beginning
after December 31, 1982, and before January 1, 2009, over

(II)

so much of such
aggregate amount as was recharacterized under this paragraph (as in effect
before and after the date of the enactment of the
Energy Independence and Investment Act of
2008) for preceding taxable years beginning after December 31,
1982.

(C)

Reduction for
post-2008 foreign oil and gas losses

The reduction under this
paragraph shall be equal to the lesser of—

(i)

the combined
foreign oil and gas income of the taxpayer for the taxable year (determined
without regard to this paragraph), reduced by an amount equal to the reduction
under subparagraph (A) for the taxable year, or

(ii)

the excess
of—

(I)

the aggregate
amount of foreign oil and gas losses for preceding taxable years beginning
after December 31, 2008, over

(II)

so much of such
aggregate amount as was recharacterized under this paragraph for preceding
taxable years beginning after December 31, 2008.

(D)

Foreign oil and
gas loss defined

(i)

In
general

For purposes of this paragraph, the term foreign
oil and gas loss means the amount by which—

(I)

the gross income
for the taxable year from sources without the United States and its possessions
(whether or not the taxpayer chooses the benefits of this subpart for such
taxable year) taken into account in determining the combined foreign oil and
gas income for such year, is exceeded by

(II)

the sum of the
deductions properly apportioned or allocated thereto.

(ii)

Net operating
loss deduction not taken into account

For purposes of clause (i),
the net operating loss deduction allowable for the taxable year under section
172(a) shall not be taken into account.

(iii)

Expropriation
and casualty losses not taken into account

For purposes of clause
(i), there shall not be taken into account—

(I)

any foreign
expropriation loss (as defined in section 172(h) (as in effect on the day
before the date of the enactment of the Revenue Reconciliation Act of 1990))
for the taxable year, or

(II)

any loss for the
taxable year which arises from fire, storm, shipwreck, or other casualty, or
from theft,

to the extent
such loss is not compensated for by insurance or otherwise.(iv)

Foreign oil
extraction loss

For purposes of subparagraph (B)(ii)(I), foreign
oil extraction losses shall be determined under this paragraph as in effect on
the day before the date of the enactment of the
Energy Independence and Investment Act of
2008.

.

(c)

Carryback and
carryover of disallowed credits

Section 907(f) (relating to
carryback and carryover of disallowed credits) is amended—

(1)

by striking
oil and gas extraction taxes each place it appears and inserting
foreign oil and gas taxes, and

(2)

by adding at the
end the following new paragraph:

(4)

Transition
rules for pre-2009 and 2009 disallowed credits

(A)

Pre-2009
credits

In the case of any unused credit year beginning before
January 1, 2009, this subsection shall be applied to any unused oil and gas
extraction taxes carried from such unused credit year to a year beginning after
December 31, 2008—

(i)

by substituting
oil and gas extraction taxes for foreign oil and gas
taxes each place it appears in paragraphs (1), (2), and (3), and

(ii)

by computing,
for purposes of paragraph (2)(A), the limitation under subparagraph (A) for the
year to which such taxes are carried by substituting foreign oil and gas
extraction income for foreign oil and gas income in
subsection (a).

(B)

2009
credits

In the case of any unused credit year beginning in 2009,
the amendments made to this subsection by the Energy Independence and Investment Act of
2008 shall be treated as being in effect for any preceding year
beginning before January 1, 2009, solely for purposes of determining how much
of the unused foreign oil and gas taxes for such unused credit year may be
deemed paid or accrued in such preceding
year.

The amendments
made by this section shall apply to taxable years beginning after December 31,
2008.

504.

Broker reporting of customer’s basis in
securities transactions

(a)

In general

(1)

Broker reporting for securities
transactions

Section 6045 is
amended by adding at the end the following new subsection:

(g)

Additional information required in the case
of securities transactions, etc

(1)

In general

If a broker is otherwise required to make a
return under subsection (a) with respect to the gross proceeds of the sale of a
covered security, the broker shall include in such return the information
described in paragraph (2).

(2)

Additional information required

(A)

In general

The information required under paragraph
(1) to be shown on a return with respect to a covered security of a customer
shall include the customer’s adjusted basis in such security and whether any
gain or loss with respect to such security is long-term or short-term (within
the meaning of section 1222).

(B)

Determination of adjusted
basis

For purposes of
subparagraph (A)—

(i)

In general

The customer’s adjusted basis shall be
determined—

(I)

in the case of any security (other than any
stock for which an average basis method is permissible under section 1012), in
accordance with the first-in first-out method unless the customer notifies the
broker by means of making an adequate identification of the stock sold or
transferred, and

(II)

in the case of any stock for which an
average basis method is permissible under section 1012, in accordance with the
broker’s default method unless the customer notifies the broker that he elects
another acceptable method under section 1012 with respect to the account in
which such stock is held.

(ii)

Exception for wash sales

Except as otherwise provided by the
Secretary, the customer’s adjusted basis shall be determined without regard to
section 1091 (relating to loss from wash sales of stock or securities) unless
the transactions occur in the same account with respect to identical
securities.

(3)

Covered security

For purposes of this subsection—

(A)

In general

The term covered security
means any specified security acquired on or after the applicable date if such
security—

(i)

was acquired through a transaction in the
account in which such security is held, or

(ii)

was transferred to such account from an
account in which such security was a covered security, but only if the broker
received a statement under section 6045A with respect to the transfer.

(B)

Specified security

The term specified security
means—

(i)

any share of stock in a corporation,

(ii)

any note, bond, debenture, or other
evidence of indebtedness,

(iii)

any commodity, or contract or derivative
with respect to such commodity, if the Secretary determines that adjusted basis
reporting is appropriate for purposes of this subsection, and

(iv)

any other financial instrument with respect
to which the Secretary determines that adjusted basis reporting is appropriate
for purposes of this subsection.

(C)

Applicable date

The term applicable date
means—

(i)

January 1, 2010, in the case of any
specified security which is stock in a corporation (other than any stock
described in clause (ii)),

(ii)

January 1, 2011, in the case of any stock
for which an average basis method is permissible under section 1012, and

(iii)

January 1, 2012, or such later date
determined by the Secretary in the case of any other specified security.

(4)

Treatment of S corporations

In the case of the sale of a covered
security acquired by an S corporation (other than a financial institution)
after December 31, 2011, such S corporation shall be treated in the same manner
as a partnership for purposes of this section.

(5)

Special rules for short sales

In the case of a short sale, reporting
under this section shall be made for the year in which such sale is
closed.

.

(2)

Broker information required with respect to
options

Section 6045, as
amended by subsection (a), is amended by adding at the end the following new
subsection:

(h)

Application to options on
securities

(1)

Exercise of option

For purposes of this section, if a covered
security is acquired or disposed of pursuant to the exercise of an option that
was granted or acquired in the same account as the covered security, the amount
received with respect to the grant or paid with respect to the acquisition of
such option shall be treated as an adjustment to gross proceeds or as an
adjustment to basis, as the case may be.

(2)

Lapse or closing transaction

In the case of the lapse (or closing
transaction (as defined in section 1234(b)(2)(A))) of an option on a specified
security or the exercise of a cash-settled option on a specified security,
reporting under subsections (a) and (g) with respect to such option shall be
made for the calendar year which includes the date of such lapse, closing
transaction, or exercise.

(3)

Prospective application

Paragraphs (1) and (2) shall not apply to
any option which is granted or acquired before January 1, 2012.

(4)

Definitions

For purposes of this subsection, the terms
covered security and specified security shall have
the meanings given such terms in subsection
(g)(3).

.

(3)

Extension of period for statements sent to
customers

(A)

In general

Subsection (b) of section 6045 is amended
by striking January 31 and inserting February
15.

(B)

Statements related to substitute
payments

Subsection (d) of
section 6045 is amended—

(i)

by striking at such time
and, and

(ii)

by inserting after other
item. the following new sentence: The written statement required
under the preceding sentence shall be furnished on or before February 15 of the
year following the calendar year in which the payment was made..

(C)

Other statements

Subsection (b) of section 6045 is amended
by adding at the end the following: In the case of a consolidated
reporting statement (as defined in regulations) with respect to any account,
any statement which would otherwise be required to be furnished on or before
January 31 of a calendar year with respect to any item reportable to the
taxpayer shall instead be required to be furnished on or before February 15 of
such calendar year if furnished with such consolidated reporting
statement..

(b)

Determination of basis of certain
securities on account by account or average basis method

Section 1012 is amended—

(1)

by striking The basis of
property and inserting the following:

(a)

In general

The basis of
property

,

(2)

by striking The cost of real
property and inserting the following:

(b)

Special rule for apportioned real estate
taxes

The cost of real
property

,
and

(3)

by adding at the end the following new
subsections:

(c)

Determinations by account

(1)

In general

In the case of the sale, exchange, or other
disposition of a specified security on or after the applicable date, the
conventions prescribed by regulations under this section shall be applied on an
account by account basis.

(2)

Application to open-end funds

(A)

In general

Except as provided in subparagraph (B), any
stock in an open-end fund acquired before January 1, 2011, shall be treated as
a separate account from any such stock acquired on or after such date.

(B)

Election by open-end fund for treatment as
single account

If an open-end
fund elects to have this subparagraph apply with respect to one or more of its
stockholders—

(i)

subparagraph (A) shall not apply with
respect to any stock in such fund held by such stockholders, and

(ii)

all stock in such fund which is held by
such stockholders shall be treated as covered securities described in section
6045(g)(3) without regard to the date of the acquisition of such stock.

A rule similar to the rule of the
preceding sentence shall apply with respect to a broker holding stock in an
open-end fund as a nominee.(3)

Definitions

For purposes of this section—

(A)

Open-end fund

The term open-end fund means a
regulated investment company (as defined in section 851) which is offering for
sale or has outstanding any redeemable security of which it is the issuer. Any
stock which is traded on an established securities exchange shall not be
treated as stock in an open-end fund.

(B)

Specified security; applicable
date

The terms
specified security and applicable date shall have the
meaning given such terms in section 6045(g).

(d)

Average basis for stock acquired pursuant
to a dividend reinvestment plan

(1)

In general

In the case of any stock acquired after
December 31, 2010, in connection with a dividend reinvestment plan, the basis
of such stock while held as part of such plan shall be determined using one of
the methods which may be used for determining the basis of stock in an open-end
fund.

(2)

Treatment after transfer

In the case of the transfer to another
account of stock to which paragraph (1) applies, such stock shall have a cost
basis in such other account equal to its basis in the dividend reinvestment
plan immediately before such transfer (properly adjusted for any fees or other
charges taken into account in connection with such transfer).

(3)

Separate accounts; election for treatment
as single account

Rules
similar to the rules of subsection (c)(2) shall apply for purposes of this
subsection.

(4)

Dividend reinvestment plan

For purposes of this subsection—

(A)

In general

The term dividend reinvestment
plan means any arrangement under which dividends on any stock are
reinvested in stock identical to the stock with respect to which the dividends
are paid.

(B)

Initial stock acquisition treated as
acquired in connection with plan

Stock shall be treated as acquired in
connection with a dividend reinvestment plan if such stock is acquired pursuant
to such plan or if the dividends paid on such stock are subject to such
plan.

.

(c)

Information by transferors To aid
brokers

(1)

In general

Subpart B of part III of subchapter A of
chapter 61 is amended by inserting after section 6045 the following new
section:

6045A.

Information required in connection with
transfers of covered securities to brokers

(a)

Furnishing of information

Every applicable person which transfers to
a broker (as defined in section 6045(c)(1)) a security which is a covered
security (as defined in section 6045(g)(3)) in the hands of such applicable
person shall furnish to such broker a written statement in such manner and
setting forth such information as the Secretary may by regulations prescribe
for purposes of enabling such broker to meet the requirements of section
6045(g).

(b)

Applicable person

For purposes of subsection (a), the term
applicable person means—

(1)

any broker (as defined in section
6045(c)(1)), and

(2)

any other person as provided by the
Secretary in regulations.

(c)

Time for furnishing statement

Except as otherwise provided by the
Secretary, any statement required by subsection (a) shall be furnished not
later than 15 days after the date of the transfer described in such
subsection.

.

(2)

Assessable penalties

Paragraph (2) of section 6724(d), as
amended by the Housing Assistance Tax Act of 2008, is amended by redesignating
subparagraphs (I) through (DD) as subparagraphs (J) through (EE), respectively,
and by inserting after subparagraph (H) the following new subparagraph:

(I)

section 6045A (relating to information
required in connection with transfers of covered securities to
brokers),

.

(3)

Clerical amendment

The table of sections for subpart B of part
III of subchapter A of chapter 61 is amended by inserting after the item
relating to section 6045 the following new item:

Sec. 6045A. Information
required in connection with transfers of covered securities to
brokers.

.

(d)

Additional issuer information To aid
brokers

(1)

In general

Subpart B of part III of subchapter A of
chapter 61, as amended by subsection (b), is amended by inserting after section
6045A the following new section:

6045B.

Returns relating to actions affecting basis
of specified securities

(a)

In general

According to the forms or regulations
prescribed by the Secretary, any issuer of a specified security shall make a
return setting forth—

(1)

a description of any organizational action
which affects the basis of such specified security of such issuer,

(2)

the quantitative effect on the basis of
such specified security resulting from such action, and

(3)

such other information as the Secretary may
prescribe.

(b)

Time for filing return

Any return required by subsection (a) shall
be filed not later than the earlier of—

(1)

45 days after the date of the action
described in subsection (a), or

(2)

January 15 of the year following the
calendar year during which such action occurred.

(c)

Statements To be furnished to holders of
specified securities or their nominees

According to the forms or regulations
prescribed by the Secretary, every person required to make a return under
subsection (a) with respect to a specified security shall furnish to the
nominee with respect to the specified security (or certificate holder if there
is no nominee) a written statement showing—

(1)

the name, address, and phone number of the
information contact of the person required to make such return,

(2)

the information required to be shown on
such return with respect to such security, and

(3)

such other information as the Secretary may
prescribe.

The written statement required under
the preceding sentence shall be furnished to the holder on or before January 15
of the year following the calendar year during which the action described in
subsection (a) occurred.(d)

Specified security

For purposes of this section, the term
specified security has the meaning given such term by section
6045(g)(3)(B). No return shall be required under this section with respect to
actions described in subsection (a) with respect to a specified security which
occur before the applicable date (as defined in section 6045(g)(3)(C)) with
respect to such security.

(e)

Public reporting in lieu of
return

The Secretary may
waive the requirements under subsections (a) and (c) with respect to a
specified security, if the person required to make the return under subsection
(a) makes publicly available, in such form and manner as the Secretary
determines necessary to carry out the purposes of this section—

(1)

the name, address, phone number, and email
address of the information contact of such person, and

(2)

the information described in paragraphs
(1), (2), and (3) of subsection
(a).

.

(2)

Assessable penalties

(A)

Subparagraph (B) of section 6724(d)(1), as
amended by the Housing Assistance Tax Act of 2008, is amended by redesignating
clause (iv) and each of the clauses which follow as clauses (v) through
(xxiii), respectively, and by inserting after clause (iii) the following new
clause:

Paragraph (2) of section 6724(d), as
amended by the Housing Assistance Tax Act of 2008 and by subsection (c)(2), is
amended by redesignating subparagraphs (J) through (EE) as subparagraphs (K)
through (FF), respectively, and by inserting after subparagraph (I) the
following new subparagraph:

the restoration, maintenance, and
improvement of wildlife and fish habitat;

(vi)

the control of noxious and exotic weeds;
and

(vii)

the reestablishment of native species;
and

(3)

to improve cooperative relationships
among—

(A)

the people that use and care for Federal
land; and

(B)

the agencies that manage the Federal
land.

3.

Definitions

In this Act:

(1)

Adjusted
share

The term adjusted
share means the number equal to the quotient obtained by
dividing—

(A)

the number equal to the quotient obtained
by dividing—

(i)

the base share for the eligible county;
by

(ii)

the income adjustment for the eligible
county; by

(B)

the number equal to the sum of the
quotients obtained under subparagraph (A) and paragraph (8)(A) for all eligible
counties.

(2)

Base share

The term base share means the
number equal to the average of—

(A)

the quotient obtained by dividing—

(i)

the number of acres of Federal land
described in paragraph (7)(A) in each eligible county; by

(ii)

the total number acres of Federal land in
all eligible counties in all eligible States; and

(B)

the quotient obtained by dividing—

(i)

the amount equal to the average of the 3
highest 25-percent payments and safety net payments made to each eligible State
for each eligible county during the eligibility period; by

(ii)

the amount equal to the sum of the amounts
calculated under clause (i) and paragraph (9)(B)(i) for all eligible counties
in all eligible States during the eligibility period.

(3)

County
payment

The term county
payment means the payment for an eligible county calculated under
section 101(b).

(4)

Eligible county

The term eligible county means
any county that—

(A)

contains Federal land (as defined in
paragraph (7)); and

(B)

elects to receive a share of the State
payment or the county payment under section 102(b).

(5)

Eligibility period

The term eligibility period
means fiscal year 1986 through fiscal year 1999.

(6)

Eligible
state

The term eligible
State means a State or territory of the United States that received a
25-percent payment for 1 or more fiscal years of the eligibility period.

(7)

Federal land

The term Federal land
means—

(A)

land within the National Forest System, as
defined in section 11(a) of the Forest and
Rangeland Renewable Resources Planning Act of 1974 (16 U.S.C.
1609(a)) exclusive of the National Grasslands and land utilization projects
designated as National Grasslands administered pursuant to the Act of July 22,
1937 (7 U.S.C. 1010–1012); and

(B)

such portions of the revested Oregon and
California Railroad and reconveyed Coos Bay Wagon Road grant land as are or may
hereafter come under the jurisdiction of the Department of the Interior, which
have heretofore or may hereafter be classified as timberlands, and power-site
land valuable for timber, that shall be managed, except as provided in the
former section 3 of the Act of August 28, 1937 (50 Stat. 875; 43 U.S.C. 1181c),
for permanent forest production.

(8)

50-Percent adjusted share

The term 50-percent adjusted
share means the number equal to the quotient obtained by
dividing—

(A)

the number equal to the quotient obtained
by dividing—

(i)

the 50-percent base share for the eligible
county; by

(ii)

the income adjustment for the eligible
county; by

(B)

the number equal to the sum of the
quotients obtained under subparagraph (A) and paragraph (1)(A) for all eligible
counties.

(9)

50-Percent base share

The term 50-percent base share
means the number equal to the average of—

(A)

the quotient obtained by dividing—

(i)

the number of acres of Federal land
described in paragraph (7)(B) in each eligible county; by

(ii)

the total number acres of Federal land in
all eligible counties in all eligible States; and

(B)

the quotient obtained by dividing—

(i)

the amount equal to the average of the 3
highest 50-percent payments made to each eligible county during the eligibility
period; by

(ii)

the amount equal to the sum of the amounts
calculated under clause (i) and paragraph (2)(B)(i) for all eligible counties
in all eligible States during the eligibility period.

(10)

50-percent payment

The term 50-percent payment
means the payment that is the sum of the 50-percent share otherwise paid to a
county pursuant to title II of the Act of August 28, 1937 (chapter 876; 50
Stat. 875; 43 U.S.C. 1181f), and the payment made to a county pursuant to the
Act of May 24, 1939 (chapter 144; 53 Stat. 753; 43 U.S.C. 1181f–1 et
seq.).

(11)

Full funding amount

The term full funding amount
means—

(A)

$500,000,000 for fiscal year 2008;
and

(B)

for fiscal year 2009 and each fiscal year
thereafter, the amount that is equal to 90 percent of the full funding amount
for the preceding fiscal year.

(12)

Income adjustment

The term income adjustment
means the square of the quotient obtained by dividing—

(A)

the per capita personal income for each
eligible county; by

(B)

the median per capita personal income of
all eligible counties.

(13)

Per capita personal income

The term per capita personal
income means the most recent per capita personal income data, as
determined by the Bureau of Economic Analysis.

(14)

Safety net payments

The term safety net payments
means the special payment amounts paid to States and counties required by
section 13982 or 13983 of the Omnibus Budget
Reconciliation Act of 1993 (Public Law 103–66; 16 U.S.C. 500 note;
43 U.S.C. 1181f note).

(15)

Secretary concerned

The term Secretary concerned
means—

(A)

the Secretary of Agriculture or the
designee of the Secretary of Agriculture with respect to the Federal land
described in paragraph (7)(A); and

(B)

the Secretary of the Interior or the
designee of the Secretary of the Interior with respect to the Federal land
described in paragraph (7)(B).

(16)

State payment

The term State payment means
the payment for an eligible State calculated under section 101(a).

(17)

25-Percent payment

The term 25-percent payment
means the payment to States required by the sixth paragraph under the heading
of FOREST SERVICE in the Act of May
23, 1908 (35 Stat. 260; 16 U.S.C. 500), and section 13 of the Act of March 1,
1911 (36 Stat. 963; 16 U.S.C. 500).

I

SECURE PAYMENTS FOR STATES AND COUNTIES
CONTAINING FEDERAL LAND

101.

Secure payments for States containing
Federal land

(a)

State Payment

For each of fiscal years 2008 through 2011,
the Secretary of Agriculture shall calculate for each eligible State an amount
equal to the sum of the products obtained by multiplying—

(1)

the adjusted share for each eligible county
within the eligible State; by

(2)

the full funding amount for the fiscal
year.

(b)

County
Payment

For each of fiscal
years 2008 through 2011, the Secretary of the Interior shall calculate for each
eligible county that received a 50-percent payment during the eligibility
period an amount equal to the product obtained by multiplying—

(1)

the 50-percent adjusted share for the
eligible county; by

(2)

the full funding amount for the fiscal
year.

102.

Payments to States and counties

(a)

Payment Amounts

Except as provided in section 103, the
Secretary of the Treasury shall pay to—

(1)

a State or territory of the United States
an amount equal to the sum of the amounts elected under subsection (b) by each
county within the State or territory for—

(A)

if the county is eligible for the
25-percent payment, the share of the 25-percent payment; or

(B)

the share of the State payment of the
eligible county; and

(2)

a county an amount equal to the amount
elected under subsection (b) by each county for—

(A)

if the county is eligible for the
50-percent payment, the 50-percent payment; or

(B)

the county payment for the eligible
county.

(b)

Election To Receive Payment Amount

(1)

Election; submission of results

(A)

In general

The election to receive a share of the
State payment, the county payment, a share of the State payment and the county
payment, a share of the 25-percent payment, the 50-percent payment, or a share
of the 25-percent payment and the 50-percent payment, as applicable, shall be
made at the discretion of each affected county by August 1, 2008 (or as soon
thereafter as the Secretary concerned determines is practicable), and August 1
of each second fiscal year thereafter, in accordance with paragraph (2), and
transmitted to the Secretary concerned by the Governor of each eligible
State.

(B)

Failure to transmit

If an election for an affected county is
not transmitted to the Secretary concerned by the date specified under
subparagraph (A), the affected county shall be considered to have elected to
receive a share of the State payment, the county payment, or a share of the
State payment and the county payment, as applicable.

(2)

Duration of election

(A)

In general

A county election to receive a share of the
25-percent payment or 50-percent payment, as applicable, shall be effective for
2 fiscal years.

(B)

Full funding amount

If a county elects to receive a share of
the State payment or the county payment, the election shall be effective for
all subsequent fiscal years through fiscal year 2011.

(3)

Source of payment amounts

The payment to an eligible State or
eligible county under this section for a fiscal year shall be derived
from—

(A)

any amounts that are appropriated to carry
out this Act;

(B)

any revenues, fees, penalties, or
miscellaneous receipts, exclusive of deposits to any relevant trust fund,
special account, or permanent operating funds, received by the Federal
Government from activities by the Bureau of Land Management or the Forest
Service on the applicable Federal land; and

(C)

to the extent of any shortfall, out of any
amounts in the Treasury of the United States not otherwise appropriated.

(c)

Distribution and Expenditure of
Payments

(1)

Distribution method

A State that receives a payment under
subsection (a) for Federal land described in section 3(7)(A) shall distribute
the appropriate payment amount among the appropriate counties in the State in
accordance with—

(A)

the Act of May 23, 1908 (16 U.S.C. 500);
and

(B)

section 13 of the Act of March 1, 1911 (36
Stat. 963; 16 U.S.C. 500).

(2)

Expenditure purposes

Subject to subsection (d), payments
received by a State under subsection (a) and distributed to counties in
accordance with paragraph (1) shall be expended as required by the laws
referred to in paragraph (1).

(d)

Expenditure Rules for Eligible
Counties

(1)

Allocations

(A)

Use of portion in same manner as 25-percent
payment or 50-percent payment, as applicable

Except as provided in paragraph (3)(B), if
an eligible county elects to receive its share of the State payment or the
county payment, not less than 80 percent, but not more than 85 percent, of the
funds shall be expended in the same manner in which the 25-percent payments or
50-percent payment, as applicable, are required to be expended.

(B)

Election as to use of balance

Except as provided in subparagraph (C), an
eligible county shall elect to do 1 or more of the following with the balance
of any funds not expended pursuant to subparagraph (A):

(i)

Reserve any portion of the balance for
projects in accordance with title II.

(ii)

Reserve not more than 7 percent of the
total share for the eligible county of the State payment or the county payment
for projects in accordance with title III.

(iii)

Return the portion of the balance not
reserved under clauses (i) and (ii) to the Treasury of the United
States.

(C)

Counties with modest
distributions

In the case of
each eligible county to which more than $100,000, but less than $350,000, is
distributed for any fiscal year pursuant to either or both of paragraphs (1)(B)
and (2)(B) of subsection (a), the eligible county, with respect to the balance
of any funds not expended pursuant to subparagraph (A) for that fiscal year,
shall—

(i)

reserve any portion of the balance
for—

(I)

carrying out projects under title
II;

(II)

carrying out projects under title III;
or

(III)

a combination of the purposes described in
subclauses (I) and (II); or

(ii)

return the portion of the balance not
reserved under clause (i) to the Treasury of the United States.

(2)

Distribution of funds

(A)

In general

Funds reserved by an eligible county under
subparagraph (B)(i) or (C)(i) of paragraph (1) for carrying out projects under
title II shall be deposited in a special account in the Treasury of the United
States.

(B)

Availability

Amounts deposited under subparagraph (A)
shall—

(i)

be available for expenditure by the
Secretary concerned, without further appropriation; and

(ii)

remain available until expended in
accordance with title II.

(3)

Election

(A)

Notification

(i)

In general

An eligible county shall notify the
Secretary concerned of an election by the eligible county under this subsection
not later than September 30, 2008 (or as soon thereafter as the Secretary
concerned determines is practicable), and September 30 of each fiscal year
thereafter.

(ii)

Failure to elect

Except as provided in subparagraph (B), if
the eligible county fails to make an election by the date specified in clause
(i), the eligible county shall—

(I)

be considered to have elected to expend 85
percent of the funds in accordance with paragraph (1)(A); and

(II)

return the balance to the Treasury of the
United States.

(B)

Counties with minor
distributions

In the case of
each eligible county to which less than $100,000 is distributed for any fiscal
year pursuant to either or both of paragraphs (1)(B) and (2)(B) of subsection
(a), the eligible county may elect to expend all the funds in the same manner
in which the 25-percent payments or 50-percent payments, as applicable, are
required to be expended.

(e)

Time for Payment

The payments required under this section
for a fiscal year shall be made as soon as practicable after the end of that
fiscal year.

103.

Transition payments to States

(a)

Definitions

In this section:

(1)

Adjusted amount

The term adjusted amount
means, with respect to a covered State—

(A)

for fiscal year 2008, 90 percent of—

(i)

the sum of the amounts paid for fiscal year
2006 under section 102(a)(2) (as in effect on September 29, 2006) for the
eligible counties in the covered State that have elected under section 102(b)
to receive a share of the State payment for fiscal year 2008; and

(ii)

the sum of the amounts paid for fiscal year
2006 under section 103(a)(2) (as in effect on September 29, 2006) for the
eligible counties in the State of Oregon that have elected under section 102(b)
to receive the county payment for fiscal year 2008;

(B)

for fiscal year 2009, 76 percent of—

(i)

the sum of the amounts paid for fiscal year
2006 under section 102(a)(2) (as in effect on September 29, 2006) for the
eligible counties in the covered State that have elected under section 102(b)
to receive a share of the State payment for fiscal year 2009; and

(ii)

the sum of the amounts paid for fiscal year
2006 under section 103(a)(2) (as in effect on September 29, 2006) for the
eligible counties in the State of Oregon that have elected under section 102(b)
to receive the county payment for fiscal year 2009; and

(C)

for fiscal year 2010, 65 percent of—

(i)

the sum of the amounts paid for fiscal year
2006 under section 102(a)(2) (as in effect on September 29, 2006) for the
eligible counties in the covered State that have elected under section 102(b)
to receive a share of the State payment for fiscal year 2010; and

(ii)

the sum of the amounts paid for fiscal year
2006 under section 103(a)(2) (as in effect on September 29, 2006) for the
eligible counties in the State of Oregon that have elected under section 102(b)
to receive the county payment for fiscal year 2010.

(2)

Covered state

The term covered State means
each of the States of California, Louisiana, Oregon, Pennsylvania, South
Carolina, South Dakota, Texas, and Washington.

(b)

Transition Payments

For each of fiscal years 2008 through 2010,
in lieu of the payment amounts that otherwise would have been made under
paragraphs (1)(B) and (2)(B) of section 102(a), the Secretary of the Treasury
shall pay the adjusted amount to each covered State and the eligible counties
within the covered State, as applicable.

(c)

Distribution of Adjusted
Amount

Except as provided in
subsection (d), it is the intent of Congress that the method of distributing
the payments under subsection (b) among the counties in the covered States for
each of fiscal years 2008 through 2010 be in the same proportion that the
payments were distributed to the eligible counties in fiscal year 2006.

(d)

Distribution of Payments in
California

The following
payments shall be distributed among the eligible counties in the State of
California in the same proportion that payments under section 102(a)(2) (as in
effect on September 29, 2006) were distributed to the eligible counties for
fiscal year 2006:

(1)

Payments to the State of California under
subsection (b).

(2)

The shares of the eligible counties of the
State payment for California under section 102 for fiscal year 2011.

(e)

Treatment of Payments

For purposes of this Act, any payment made
under subsection (b) shall be considered to be a payment made under section
102(a).

II

SPECIAL PROJECTS ON FEDERAL LAND

201.

Definitions

In this title:

(1)

Participating county

The term participating county
means an eligible county that elects under section 102(d) to expend a portion
of the Federal funds received under section 102 in accordance with this
title.

(2)

Project funds

The term project funds means
all funds an eligible county elects under section 102(d) to reserve for
expenditure in accordance with this title.

(3)

Resource advisory committee

The term resource advisory
committee means—

(A)

an advisory committee established by the
Secretary concerned under section 205; or

(B)

an advisory committee determined by the
Secretary concerned to meet the requirements of section 205.

(4)

Resource management plan

The term resource management
plan means—

(A)

a land use plan prepared by the Bureau of
Land Management for units of the Federal land described in section 3(7)(B)
pursuant to section 202 of the Federal Land
Policy and Management Act of 1976 (43 U.S.C. 1712); or

(B)

a land and resource management plan
prepared by the Forest Service for units of the National Forest System pursuant
to section 6 of the Forest and Rangeland
Renewable Resources Planning Act of 1974 (16 U.S.C. 1604).

202.

General limitation on use of project
funds

(a)

Limitation

Project funds shall be expended solely on
projects that meet the requirements of this title.

(b)

Authorized Uses

Project funds may be used by the Secretary
concerned for the purpose of entering into and implementing cooperative
agreements with willing Federal agencies, State and local governments, private
and nonprofit entities, and landowners for protection, restoration, and
enhancement of fish and wildlife habitat, and other resource objectives
consistent with the purposes of this Act on Federal land and on non-Federal
land where projects would benefit the resources on Federal land.

203.

Submission of project proposals

(a)

Submission of Project Proposals to
Secretary Concerned

(1)

Projects funded using project
funds

Not later than
September 30 for fiscal year 2008 (or as soon thereafter as the Secretary
concerned determines is practicable), and each September 30 thereafter for each
succeeding fiscal year through fiscal year 2011, each resource advisory
committee shall submit to the Secretary concerned a description of any projects
that the resource advisory committee proposes the Secretary undertake using any
project funds reserved by eligible counties in the area in which the resource
advisory committee has geographic jurisdiction.

(2)

Projects funded using other
funds

A resource advisory
committee may submit to the Secretary concerned a description of any projects
that the committee proposes the Secretary undertake using funds from State or
local governments, or from the private sector, other than project funds and
funds appropriated and otherwise available to do similar work.

(3)

Joint
projects

Participating
counties or other persons may propose to pool project funds or other funds,
described in paragraph (2), and jointly propose a project or group of projects
to a resource advisory committee established under section 205.

(b)

Required Description of
Projects

In submitting
proposed projects to the Secretary concerned under subsection (a), a resource
advisory committee shall include in the description of each proposed project
the following information:

(1)

The purpose of the project and a
description of how the project will meet the purposes of this title.

(2)

The anticipated duration of the
project.

(3)

The anticipated cost of the project.

(4)

The proposed source of funding for the
project, whether project funds or other funds.

(5)(A)

Expected outcomes, including how the
project will meet or exceed desired ecological conditions, maintenance
objectives, or stewardship objectives.

(B)

An
estimate of the amount of any timber, forage, and other commodities and other
economic activity, including jobs generated, if any, anticipated as part of the
project.

(6)

A detailed monitoring plan, including
funding needs and sources, that—

(A)

tracks and identifies the positive or
negative impacts of the project, implementation, and provides for validation
monitoring; and

(B)

includes an assessment of the
following:

(i)

Whether or not the project met or exceeded
desired ecological conditions; created local employment or training
opportunities, including summer youth jobs programs such as the Youth
Conservation Corps where appropriate.

(ii)

Whether the project improved the use of, or
added value to, any products removed from land consistent with the purposes of
this title.

The Secretary
concerned may make a decision to approve a project submitted by a resource
advisory committee under section 203 only if the proposed project satisfies
each of the following conditions:

(1)

The project complies with all applicable
Federal laws (including regulations).

(2)

The project is consistent with the
applicable resource management plan and with any watershed or subsequent plan
developed pursuant to the resource management plan and approved by the
Secretary concerned.

(3)

The project has been approved by the
resource advisory committee in accordance with section 205, including the
procedures issued under subsection (e) of that section.

(4)

A project description has been submitted by
the resource advisory committee to the Secretary concerned in accordance with
section 203.

(5)

The project will improve the maintenance of
existing infrastructure, implement stewardship objectives that enhance forest
ecosystems, and restore and improve land health and water quality.

(b)

Environmental Reviews

(1)

Request for payment by county

The Secretary concerned may request the
resource advisory committee submitting a proposed project to agree to the use
of project funds to pay for any environmental review, consultation, or
compliance with applicable environmental laws required in connection with the
project.

(2)

Conduct of environmental
review

If a payment is
requested under paragraph (1) and the resource advisory committee agrees to the
expenditure of funds for this purpose, the Secretary concerned shall conduct
environmental review, consultation, or other compliance responsibilities in
accordance with Federal laws (including regulations).

(3)

Effect of refusal to pay

(A)

In general

If a resource advisory committee does not
agree to the expenditure of funds under paragraph (1), the project shall be
deemed withdrawn from further consideration by the Secretary concerned pursuant
to this title.

(B)

Effect of withdrawal

A withdrawal under subparagraph (A) shall
be deemed to be a rejection of the project for purposes of section
207(c).

(c)

Decisions of Secretary Concerned

(1)

Rejection of projects

(A)

In general

A decision by the Secretary concerned to
reject a proposed project shall be at the sole discretion of the Secretary
concerned.

(B)

No administrative appeal or judicial
review

Notwithstanding any
other provision of law, a decision by the Secretary concerned to reject a
proposed project shall not be subject to administrative appeal or judicial
review.

(C)

Notice of rejection

Not later than 30 days after the date on
which the Secretary concerned makes the rejection decision, the Secretary
concerned shall notify in writing the resource advisory committee that
submitted the proposed project of the rejection and the reasons for
rejection.

(2)

Notice of project approval

The Secretary concerned shall publish in
the Federal Register notice of each project approved under subsection (a) if
the notice would be required had the project originated with the
Secretary.

(d)

Source and Conduct of Project

Once the Secretary concerned accepts a
project for review under section 203, the acceptance shall be deemed a Federal
action for all purposes.

(e)

Implementation of Approved
Projects

(1)

Cooperation

Notwithstanding chapter 63 of title 31,
United States Code, using project funds the Secretary concerned may enter into
contracts, grants, and cooperative agreements with States and local
governments, private and nonprofit entities, and landowners and other persons
to assist the Secretary in carrying out an approved project.

(2)

Best value contracting

(A)

In general

For any project involving a contract
authorized by paragraph (1) the Secretary concerned may elect a source for
performance of the contract on a best value basis.

(B)

Factors

The Secretary concerned shall determine
best value based on such factors as—

(i)

the technical demands and complexity of the
work to be done;

(ii)(I)

the ecological objectives of the project;
and

(II)

the sensitivity of the resources being
treated;

(iii)

the past experience by the contractor with
the type of work being done, using the type of equipment proposed for the
project, and meeting or exceeding desired ecological conditions; and

(iv)

the commitment of the contractor to hiring
highly qualified workers and local residents.

(3)

Merchantable timber contracting pilot
program

(A)

Establishment

The Secretary concerned shall establish a
pilot program to implement a certain percentage of approved projects involving
the sale of merchantable timber using separate contracts for—

(i)

the harvesting or collection of
merchantable timber; and

(ii)

the sale of the timber.

(B)

Annual percentages

Under the pilot program, the Secretary
concerned shall ensure that, on a nationwide basis, not less than the following
percentage of all approved projects involving the sale of merchantable timber
are implemented using separate contracts:

(i)

For fiscal year 2008, 35 percent.

(ii)

For fiscal year 2009, 45 percent.

(iii)

For each of fiscal years 2010 and 2011, 50
percent.

(C)

Inclusion in pilot program

The decision whether to use separate
contracts to implement a project involving the sale of merchantable timber
shall be made by the Secretary concerned after the approval of the project
under this title.

(D)

Assistance

(i)

In general

The Secretary concerned may use funds from
any appropriated account available to the Secretary for the Federal land to
assist in the administration of projects conducted under the pilot
program.

(ii)

Maximum amount of assistance

The total amount obligated under this
subparagraph may not exceed $1,000,000 for any fiscal year during which the
pilot program is in effect.

(E)

Review and report

(i)

Initial
report

Not later than
September 30, 2010, the Comptroller General shall submit to the Committees on
Agriculture, Nutrition, and Forestry and Energy and Natural Resources of the
Senate and the Committees on Agriculture and Natural Resources of the House of
Representatives a report assessing the pilot program.

(ii)

Annual report

The Secretary concerned shall submit to the
Committees on Agriculture, Nutrition, and Forestry and Energy and Natural
Resources of the Senate and the Committees on Agriculture and Natural Resources
of the House of Representatives an annual report describing the results of the
pilot program.

(f)

Requirements for Project
Funds

The Secretary shall
ensure that at least 50 percent of all project funds be used for projects that
are primarily dedicated—

(1)

to road maintenance, decommissioning, or
obliteration; or

(2)

to restoration of streams and
watersheds.

205.

Resource advisory Committees

(a)

Establishment and Purpose of Resource
Advisory Committees

(1)

Establishment

The Secretary concerned shall establish and
maintain resource advisory committees to perform the duties in subsection (b),
except as provided in paragraph (4).

(2)

Purpose

The purpose of a resource advisory
committee shall be—

(A)

to improve collaborative relationships;
and

(B)

to provide advice and recommendations to
the land management agencies consistent with the purposes of this title.

(3)

Access to resource advisory
committees

To ensure that
each unit of Federal land has access to a resource advisory committee, and that
there is sufficient interest in participation on a committee to ensure that
membership can be balanced in terms of the points of view represented and the
functions to be performed, the Secretary concerned may, establish resource
advisory committees for part of, or 1 or more, units of Federal land.

(4)

Existing advisory committees

(A)

In general

An advisory committee that meets the
requirements of this section, a resource advisory committee established before
September 29, 2006, or an advisory committee determined by the Secretary
concerned before September 29, 2006, to meet the requirements of this section
may be deemed by the Secretary concerned to be a resource advisory committee
for the purposes of this title.

(B)

Charter

A charter for a committee described in
subparagraph (A) that was filed on or before September 29, 2006, shall be
considered to be filed for purposes of this Act.

(C)

Bureau of land management advisory
committees

The Secretary of
the Interior may deem a resource advisory committee meeting the requirements of
subpart 1784 of part 1780 of title 43, Code of Federal Regulations, as a
resource advisory committee for the purposes of this title.

(b)

Duties

A resource advisory committee shall—

(1)

review projects proposed under this title
by participating counties and other persons;

(2)

propose projects and funding to the
Secretary concerned under section 203;

(3)

provide early and continuous coordination
with appropriate land management agency officials in recommending projects
consistent with purposes of this Act under this title;

(4)

provide frequent opportunities for
citizens, organizations, tribes, land management agencies, and other interested
parties to participate openly and meaningfully, beginning at the early stages
of the project development process under this title;

(5)(A)

monitor projects that have been approved
under section 204; and

(B)

advise the designated Federal official on
the progress of the monitoring efforts under subparagraph (A); and

(6)

make recommendations to the Secretary
concerned for any appropriate changes or adjustments to the projects being
monitored by the resource advisory committee.

(c)

Appointment by the Secretary

(1)

Appointment and term

(A)

In general

The Secretary concerned, shall appoint the
members of resource advisory committees for a term of 4 years beginning on the
date of appointment.

(B)

Reappointment

The Secretary concerned may reappoint
members to subsequent 4-year terms.

(2)

Basic requirements

The Secretary concerned shall ensure that
each resource advisory committee established meets the requirements of
subsection (d).

(3)

Initial appointment

Not later than 180 days after the date of
the enactment of this Act, the Secretary concerned shall make initial
appointments to the resource advisory committees.

(4)

Vacancies

The Secretary concerned shall make
appointments to fill vacancies on any resource advisory committee as soon as
practicable after the vacancy has occurred.

(5)

Compensation

Members of the resource advisory committees
shall not receive any compensation.

(d)

Composition of Advisory Committee

(1)

Number

Each resource advisory committee shall be
comprised of 15 members.

(2)

Community interests
represented

Committee members
shall be representative of the interests of the following 3 categories:

represent American Indian tribes within or
adjacent to the area for which the committee is organized;

(iv)

are school officials or teachers; or

(v)

represent the affected public at
large.

(3)

Balanced representation

In appointing committee members from the 3
categories in paragraph (2), the Secretary concerned shall provide for balanced
and broad representation from within each category.

(4)

Geographic distribution

The members of a resource advisory
committee shall reside within the State in which the committee has jurisdiction
and, to extent practicable, the Secretary concerned shall ensure local
representation in each category in paragraph (2).

(5)

Chairperson

A majority on each resource advisory
committee shall select the chairperson of the committee.

(e)

Approval Procedures

(1)

In general

Subject to paragraph (3), each resource
advisory committee shall establish procedures for proposing projects to the
Secretary concerned under this title.

(2)

Quorum

A quorum must be present to constitute an
official meeting of the committee.

(3)

Approval by majority of
members

A project may be
proposed by a resource advisory committee to the Secretary concerned under
section 203(a), if the project has been approved by a majority of members of
the committee from each of the 3 categories in subsection (d)(2).

(f)

Other Committee Authorities and
Requirements

(1)

Staff assistance

A resource advisory committee may submit to
the Secretary concerned a request for periodic staff assistance from Federal
employees under the jurisdiction of the Secretary.

(2)

Meetings

All meetings of a resource advisory
committee shall be announced at least 1 week in advance in a local newspaper of
record and shall be open to the public.

(3)

Records

A resource advisory committee shall
maintain records of the meetings of the committee and make the records
available for public inspection.

206.

Use of project funds

(a)

Agreement Regarding Schedule and Cost of
Project

(1)

Agreement between parties

The Secretary concerned may carry out a
project submitted by a resource advisory committee under section 203(a) using
project funds or other funds described in section 203(a)(2), if, as soon as
practicable after the issuance of a decision document for the project and the
exhaustion of all administrative appeals and judicial review of the project
decision, the Secretary concerned and the resource advisory committee enter
into an agreement addressing, at a minimum, the following:

(A)

The schedule for completing the
project.

(B)

The total cost of the project, including
the level of agency overhead to be assessed against the project.

(C)

For a multiyear project, the estimated cost
of the project for each of the fiscal years in which it will be carried
out.

(D)

The remedies for failure of the Secretary
concerned to comply with the terms of the agreement consistent with current
Federal law.

(2)

Limited use of federal funds

The Secretary concerned may decide, at the
sole discretion of the Secretary concerned, to cover the costs of a portion of
an approved project using Federal funds appropriated or otherwise available to
the Secretary for the same purposes as the project.

(b)

Transfer of Project Funds

(1)

Initial transfer required

As soon as practicable after the agreement
is reached under subsection (a) with regard to a project to be funded in whole
or in part using project funds, or other funds described in section 203(a)(2),
the Secretary concerned shall transfer to the applicable unit of National
Forest System land or Bureau of Land Management District an amount of project
funds equal to—

(A)

in the case of a project to be completed in
a single fiscal year, the total amount specified in the agreement to be paid
using project funds, or other funds described in section 203(a)(2); or

(B)

in the case of a multiyear project, the
amount specified in the agreement to be paid using project funds, or other
funds described in section 203(a)(2) for the first fiscal year.

(2)

Condition on project
commencement

The unit of
National Forest System land or Bureau of Land Management District concerned,
shall not commence a project until the project funds, or other funds described
in section 203(a)(2) required to be transferred under paragraph (1) for the
project, have been made available by the Secretary concerned.

(3)

Subsequent transfers for multiyear
projects

(A)

In general

For the second and subsequent fiscal years
of a multiyear project to be funded in whole or in part using project funds,
the unit of National Forest System land or Bureau of Land Management District
concerned shall use the amount of project funds required to continue the
project in that fiscal year according to the agreement entered into under
subsection (a).

(B)

Suspension of work

The Secretary concerned shall suspend work
on the project if the project funds required by the agreement in the second and
subsequent fiscal years are not available.

207.

Availability of project funds

(a)

Submission of Proposed Projects To Obligate
Funds

By September 30, 2008
(or as soon thereafter as the Secretary concerned determines is practicable),
and each September 30 thereafter for each succeeding fiscal year through fiscal
year 2011, a resource advisory committee shall submit to the Secretary
concerned pursuant to section 203(a)(1) a sufficient number of project
proposals that, if approved, would result in the obligation of at least the
full amount of the project funds reserved by the participating county in the
preceding fiscal year.

(b)

Use or Transfer of Unobligated
Funds

Subject to section 208,
if a resource advisory committee fails to comply with subsection (a) for a
fiscal year, any project funds reserved by the participating county in the
preceding fiscal year and remaining unobligated shall be available for use as
part of the project submissions in the next fiscal year.

(c)

Effect of Rejection of
Projects

Subject to section
208, any project funds reserved by a participating county in the preceding
fiscal year that are unobligated at the end of a fiscal year because the
Secretary concerned has rejected one or more proposed projects shall be
available for use as part of the project submissions in the next fiscal
year.

(d)

Effect of Court Orders

(1)

In general

If an approved project under this Act is
enjoined or prohibited by a Federal court, the Secretary concerned shall return
the unobligated project funds related to the project to the participating
county or counties that reserved the funds.

(2)

Expenditure of funds

The returned funds shall be available for
the county to expend in the same manner as the funds reserved by the county
under subparagraph (B) or (C)(i) of section 102(d)(1).

208.

Termination of authority

(a)

In General

The authority to initiate projects under
this title shall terminate on September 30, 2011.

(b)

Deposits in Treasury

Any project funds not obligated by
September 30, 2012, shall be deposited in the Treasury of the United
States.

III

COUNTY FUNDS

301.

Definitions

In this title:

(1)

County funds

The term county funds means
all funds an eligible county elects under section 102(d) to reserve for
expenditure in accordance with this title.

(2)

Participating county

The term participating county
means an eligible county that elects under section 102(d) to expend a portion
of the Federal funds received under section 102 in accordance with this
title.

302.

Use

(a)

Authorized Uses

A participating county, including any
applicable agencies of the participating county, shall use county funds, in
accordance with this title, only—

(1)

to carry out activities under the Firewise
Communities program to provide to homeowners in fire-sensitive ecosystems
education on, and assistance with implementing, techniques in home siting, home
construction, and home landscaping that can increase the protection of people
and property from wildfires;

(2)

to reimburse the participating county for
search and rescue and other emergency services, including firefighting, that
are—

(A)

performed on Federal land after the date on
which the use was approved under subsection (b);

(B)

paid for by the participating county;
and

(3)

to develop community wildfire protection
plans in coordination with the appropriate Secretary concerned.

(b)

Proposals

A participating county shall use county
funds for a use described in subsection (a) only after a 45-day public comment
period, at the beginning of which the participating county shall—

(1)

publish in any publications of local record
a proposal that describes the proposed use of the county funds; and

(2)

submit the proposal to any resource
advisory committee established under section 205 for the participating
county.

303.

Certification

(a)

In General

Not later than February 1 of the year after
the year in which any county funds were expended by a participating county, the
appropriate official of the participating county shall submit to the Secretary
concerned a certification that the county funds expended in the applicable year
have been used for the uses authorized under section 302(a), including a
description of the amounts expended and the uses for which the amounts were
expended.

(b)

Review

The Secretary concerned shall review the
certifications submitted under subsection (a) as the Secretary concerned
determines to be appropriate.

304.

Termination of authority

(a)

In General

The authority to initiate projects under
this title terminates on September 30, 2011.

(b)

Availability

Any county funds not obligated by September
30, 2012, shall be returned to the Treasury of the United States.

IV

MISCELLANEOUS PROVISIONS

401.

Regulations

The Secretary of Agriculture and the
Secretary of the Interior shall issue regulations to carry out the purposes of
this Act.

402.

Authorization of
appropriations

There are
authorized to be appropriated such sums as are necessary to carry out this Act
for each of fiscal years 2008 through 2011.

403.

Treatment of funds and revenues

(a)

Relation to Other
Appropriations

Funds made
available under section 402 and funds made available to a Secretary concerned
under section 206 shall be in addition to any other annual appropriations for
the Forest Service and the Bureau of Land Management.

(b)

Deposit of Revenues and Other
Funds

All revenues generated
from projects pursuant to title II, including any interest accrued from the
revenues, shall be deposited in the Treasury of the United
States.

.

(b)

Forest receipt payments to eligible states
and counties

(1)

Act of May 23, 1908

The sixth paragraph under the heading
FOREST
SERVICE in the Act of May 23, 1908 (16 U.S.C. 500) is
amended in the first sentence by striking twenty-five percentum
and all that follows through shall be paid and inserting the
following: an amount equal to the annual average of 25 percent of all
amounts received for the applicable fiscal year and each of the preceding 6
fiscal years from each national forest shall be paid.

(2)

Weeks law

Section 13 of the Act of March 1, 1911
(commonly known as the Weeks Law) (16 U.S.C. 500) is amended in
the first sentence by striking twenty-five percentum and all
that follows through shall be paid and inserting the following:
an amount equal to the annual average of 25 percent of all amounts
received for the applicable fiscal year and each of the preceding 6 fiscal
years from each national forest shall be paid.

(c)

Payments in lieu of taxes

(1)

In general

Section 6906 of title 31, United States
Code, is amended to read as follows:

6906.

Funding

For each of fiscal years 2008 through
2012—

(1)

each county or other eligible unit of local
government shall be entitled to payment under this chapter; and

(2)

sums shall be made available to the
Secretary of the Interior for obligation or expenditure in accordance with this
chapter.

.

(2)

Conforming amendment

The table of sections for chapter 69 of
title 31, United States Code, is amended by striking the item relating to
section 6906 and inserting the following:

6906.
Funding.

.

(3)

Budget scorekeeping

(A)

In general

Notwithstanding the Budget Scorekeeping
Guidelines and the accompanying list of programs and accounts set forth in the
joint explanatory statement of the committee of conference accompanying
Conference Report 105–217, the section in this title regarding Payments in Lieu
of Taxes shall be treated in the baseline for purposes of section 257 of the
Balanced Budget and Emergency Deficit Control Act of 1985 (as in effect prior
to September 30, 2002), and by the Chairmen of the House and Senate Budget
Committees, as appropriate, for purposes of budget enforcement in the House and
Senate, and under the Congressional Budget Act of 1974 as if Payment in Lieu of
Taxes (14–1114–0–1–806) were an account designated as Appropriated Entitlements
and Mandatories for Fiscal Year 1997 in the joint explanatory statement of the
committee of conference accompanying Conference Report 105–217.

(B)

Effective
date

This paragraph shall
remain in effect for the fiscal years to which the entitlement in section 6906
of title 31, United States Code (as amended by paragraph (1)), applies.

602.

Clarification of uniform definition of
child

(a)

Child must be younger than
claimant

Section 152(c)(3)(A)
is amended by inserting is younger than the taxpayer claiming such
individual as a qualifying child and after such
individual.

(b)

Child must be unmarried

Section 152(c)(1) is amended by striking
and at the end of subparagraph (C), by striking the period at
the end of subparagraph (D) and inserting , and, and by adding
at the end the following new subparagraph:

(E)

who has not filed a joint return (other
than only for a claim of refund) with the individual's spouse under section
6013 for the taxable year beginning in the calendar year in which the taxable
year of the taxpayer
begins.

.

(c)

Restrict qualifying child tax benefits to
child's parent

(1)

Child tax credit

Subsection (a) of section 24 is amended by
inserting for which the taxpayer is allowed a deduction under section
151 after of the taxpayer.

(2)

Persons other than parents claiming
qualifying child

(A)

In general

Paragraph (4) of section 152(c) is amended
by adding at the end the following new subparagraph:

(C)

No parent claiming qualifying
child

If the parents of an
individual may claim such individual as a qualifying child but no parent so
claims the individual, such individual may be claimed as the qualifying child
of another taxpayer but only if the adjusted gross income of such taxpayer is
higher than the highest adjusted gross income of any parent of the
individual.

.

(B)

Conforming amendments

(i)

Subparagraph (A) of section 152(c)(4) is
amended by striking Except through 2 or more
taxpayers and inserting Except as provided in subparagraphs (B)
and (C), if (but for this paragraph) an individual may be claimed as a
qualifying child by 2 or more taxpayers.

(ii)

The heading for paragraph (4) of section
152(c) is amended by striking claiming and inserting
who can claim the
same.

(d)

Effective
date

The amendments made by
this section shall apply to taxable years beginning after December 31,
2008.